TD Bank Survey: 78 Percent of Consumers Overspend on Holiday Purchases

TD Bank discovered millennials budget more and spend less than gen Xers and boomers.

Nearly eight out of 10 consumers (78 percent) overspend on holiday purchases, according to TD Bank's (No. 39 on the DiversityInc Top 50 Companies list) Merry Money Holiday Spending Survey – with the average shopper overspending by $215.

While more than half of TD's survey respondents (52 percent) create a budget – only 70 percent actually stick to it.

So what makes holiday shoppers blow their budgets? Sixty-five percent say it's all about finding the perfect gift, while 57 percent indulge in small impulse purchases such as stocking stuffers and holiday treats. Nearly half of all consumers (49 percent) also treat themselves while shopping, while one in four goes over budget on incidentals, like wrapping paper and gift cards.

"Spending during the holidays can add a lot of stress to what should be a wonderful and relaxing time of year," said James Capolongo, Head of Deposit Products, Pricing and Fee Income for TD Bank. "By establishing a budget and using a debit card to make the most of your holiday, people can avoid overspending and shift their focus to what matters most – spending time with family and friends."


Debit cards are convenient; cash isn't dead

Fifty-five percent of those surveyed use debit cards for holiday purchases – citing convenience (61 percent) and ease of budgeting (59 percent). Credit cards got the nod for bigger purchases (56 percent) and online shopping (57 percent).

Here's how today's holiday shoppers prefer to pay, according to the survey:

- 55 percent use debit cards – especially for purchases under $20 (47 percent)

- 61 percent use credit cards – especially for purchases over $20 (60 percent)

- 57 percent use cash or a check

- 7 percent used prepaid cards

Watch out for the holiday hangover

When paying for holiday purchases, 48 percent of those surveyed plan to pay as they go, while one in four (25 percent) will need at least three months to cover holiday bills.

With average retail credit card interest rates at 23.84 percent, according to, consumers who do not make repayment a priority could end up spending far more than they've budgeted. According to a consumer with a $1,000 balance on a retail credit card (with an annual interest rate of 23 percent) who makes only the minimum payments will need 73 months to pay off the balance, incurring $840 in interest fees.

What makes a perfect gift?

There's good news for those who fear the holidays have become too commercial: More than 22 percent said it was the giver – NOT the gift – that made a present a personal favorite.

But don't ditch that iPad for a hand-knit scarf! Electronics still topped the list as the favorite type of gift (20 percent), closely followed by jewelry (12 percent).

On women, men and Millennials

While women outspend men on gifts for family and friends ($191versus $161), men outspend women on their pets ($32 versus $17), coworkers ($45 versus $24) and themselves ($55 versus $39).

Millennials are more likely to create a holiday budget (64 percent) than gen Xers (52 percent) and baby boomers (43 percent). They're also slightly more likely to stick to their budgets (73 percent compared with 70 percent overall).

All told, Millennials spend less during the holidays ($515) than their counterparts (gen Xers $589; and boomers$530) and are also more likely to re-gift (61 percent) than gen Xers (56 percent) and boomers (47 percent).

"The emotions that come with the holidays — good and bad — make it difficult for even the most budget-conscious shoppers to stick to a plan," said Lauren Greutman, Frugal Living Expert. "Give yourself a little wiggle room during the season, but keep an eye on the small, extra purchases and incidentals – that's where spending can really add up."

Additional highlights are available on the TD Bank Media Room.

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