We’ve all seen the predicitons. After being cooped up almost all of last year and most of this one, summer 2021 is going to be a party for the ages. Sales of dresses are through the roof, rental cars are nearly impossible to find and good luck getting tickets to concerts or other events.
People are back.
But how are we going to pay for all this, especially after a year of layoffs and economic uncertainty? Debt.
By the numbers: According to a June 2021 survey by CreditCards.com, 44% of U.S. adults plan to take on new debt to “treat themselves” as Covid restrictions ease this summer. The top areas in which respondents said they would be willing to accrue debt are automotive (15%), home renovations (14%) and travel (12%).
Overall, 66% of people say they plan to purchase something (anything!) to celebrate the end of the pandemic, even if they don’t know how they’ll pay for it just yet.
What’s hot? Cars are just the start. The other top discretionary spending categories according to the survey are:
- Travel (35%)
- Out-of-home entertainment (26%)
- Bars and restaurants (26%)
- Home renovations (25%)
- Clothing and accessories (21%)
Should we be concerned? “After putting up with COVID for more than a year, I think everyone is entitled to treat themselves. However, I’m concerned that so many people are willing to go into debt as a result. Credit card rates have been creeping up, and they generally range from about 16% to 24%. That’s really expensive debt.” — Ted Rossman, senior industry analyst for CreditCards.com.
My take: On the one hand YOLO, you only live once. 2020 was a year to forget and it’s a great time to make up for some lost months. On the other hand, though, think of this summer like you would holiday spending. It’s a ton of fun at the time but be careful not to wake up in a few months with a spending hangover that drags down your 2021 and beyond too.
