The holiday shopping season is over now, and many Americans are seeing the impact on their credit card bills and bank statements. Even before the holiday season, though, the COVID-19 pandemic already put a strain on people’s wallets, causing them to reevaluate how much they were able to spend. However, things are gradually getting better. In a nationally representative survey conducted by WalletHub, 54% of respondents said they plan to make more large purchases in 2022 than they did in 2021.
Different people have been impacted to different degrees due to the pandemic, though. People with high incomes and stable employment may have no trouble putting large purchases on a credit card, reaping rewards, and paying them off quickly. It’s a different story for Americans with less stable incomes, though. When it comes to non-essential large purchases, they may be better off saving up and paying in cash.
Below are some more highlights of WalletHub’s survey, along with additional insight from a panel of experts.
Key Stats
- People spent less last year. 35% of Americans did not make a large purchase last year due to Covid.
- Men max out more. Women are about 12% less likely than men to have maxed out a card at least once.
- Millennials are more likely to max out. Millennials are about 13% more likely than Baby Boomers to have maxed out a card at least once.
- Maxing out is worrisome. 84 Million Americans fear maxing out their credit cards or overdrafting their accounts on large purchases.
- Planning takes longer than paying. 66% of people spend more time planning for a large purchase than paying it off.
Ask the Experts
Different people have different preferences on how to pay for large purchases. But how much of an impact do these preferences actually have on consumers, and are some payment methods objectively better? To gain further insight, we posed the following questions to a panel of experts. Click on the experts’ profiles to read their bios and responses.
- Why do so many people fear maxing out their credit cards when making large purchases, and what advice do you have for shoppers with such concerns?
- Do you think there is a correlation between gender and maxing out credit cards?
- Is it natural for people's definition of a "large" purchase to change over time?
Ask the Experts
Ph.D. – Professor, Department of Economics, Finance & Real Estate, Leon Hess Business School – Monmouth University
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University Professor of Finance – American University
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Ph.D. – Associate Professor of Mathematics – Guttman Community College
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Associate Dean for Faculty Development; Professor of Law, Frederick M. Hart Chair in Consumer and Clinical Law, School of Law – University of New Mexico
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Ph.D., CFP® – Assistant Professor and Director of Financial Planning and Financial Literacy, School of Business & Leadership – University of Charleston, West Virginia
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CFP® – Wealth Management Advisor, Client Relationships – TIAA
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Survey Methodology
WalletHub conducted this nationally representative survey with around 300 respondents from 1/3/22 to 1/7/22. We weighted the statistical results to correct for demographic discrepancies. The margin of error for the total respondents is plus or minus 6% at a confidence level of 95%.
Full Details Overall
| What do you consider a large purchase? | |
|---|---|
| Over $250 | 34% |
| Over $500 | 26% |
| Over $100 | 23% |
| Over $1000 | 17% |
| What is your preferred payment method for large purchases? | |
| Credit card | 61% |
| Debit card | 26% |
| Cash | 12% |
| Check | 1% |
| What’s your main motivation for using your preferred payment method for large purchases? | |
| Earning rewards | 35% |
| Easiest/quickest option | 26% |
| Avoiding credit card debt | 21% |
| Can pay off over time | 10% |
| Fraud/security | 8% |
| Do you worry about maxing out your card or overdrafting your account when making a large purchase? | |
| No | 67% |
| Yes | 33% |
| Have you ever maxed out a credit card after making a large purchase? | |
| No | 61% |
| Yes, once | 25% |
| Yes, more than once | 14% |
| Do you plan to make more large purchases in 2022 than you did in 2021? | |
| Yes | 54% |
| No | 46% |
| Do you spend more time planning for a large purchase or paying it off? | |
| Planning | 66% |
| Paying it off | 34% |
| Did COVID-19 prevent you from making a large purchase in 2021? | |
| No, COVID did not prevent me from making a large purchase | 65% |
| Yes, COVID did prevent me from making a large purchase | 35% |
Note: Percentages may not total 100% due to rounding.