A recent survey reveals that nearly a third of American families expect to incur debt from back-to-school shopping due to ongoing inflationary pressures.
As inflation continues to strain household budgets, nearly one-third of American families are expected to incur debt from back-to-school shopping, according to a survey conducted by Bankrate and published on Monday. The survey of 2,300 adults, conducted between July 15 and 17, highlights the financial burden that school supplies, clothing, and other necessities are placing on families nationwide.
Approximately 31% of back-to-school shoppers have either already taken on or anticipate taking on debt to cover the costs associated with the upcoming school year. Of these, nearly one in four will accumulate credit card debt, while around one in eight will resort to buy now, pay later plans that involve paying for items in installments, the survey found.
The survey underscores the challenges that families like that of Isabella Canales, a 29-year-old resident of suburban Dallas, are facing. “I don’t understand how people are living right now,” Canales told Bankrate. “When you look at the amount that you have to pay for these uniforms and all that stuff, it’s crazy*.”
The back-to-school shopping season is here
— Bad Trader (@BadTraderApp) August 19, 2024
According to a recent Bankrate report, nearly one-third (31%) of shoppers say buying supplies for the new school year will push them into debt. The survey polled over 2,300 adults in July.
Back to school shopping is more expensive ⬇️ pic.twitter.com/sqMGJ1nJyO
Despite a recent drop in year-over-year inflation below 3% for the first time since 2021, the inflation rate remains well above the Federal Reserve’s target of 2%. It is also more than double the 1.4% inflation rate observed when President Joe Biden assumed office. The persistently high inflation is exacerbating the cost of essential items. For instance, the price of luggage, including backpacks, increased by 15.6% from June 2023 to June 2024.
Although the percentage of shoppers who reported that inflation has influenced their buying habits has decreased to 32% in 2024 from 41% in 2022, the financial strain remains significant. Bankrate’s survey indicates that the personal savings rate has plummeted from 32% in April 2020 to just 3.4% in June 2024, as reported by the Federal Reserve Bank of St. Louis (FRED). This decline in savings is contributing to the surge in debt.
The collective credit card debt held by Americans reached an unprecedented $1.06 trillion as of August 7, according to FRED. In response to these financial challenges, nearly half of back-to-school shoppers have adopted “money-saving strategies,” with 22% setting aside funds specifically to cover school-related expenses this fall, according to Bankrate.
“It’s important not to let your guard down,” advised Bankrate Senior Industry Analyst Ted Rossman. “Credit card rates and balances remain near record highs and there’s a cumulative toll to all of the price increases we’ve seen the past few years.”
As families navigate these economic pressures, the decision to incur debt for back-to-school shopping is emblematic of the broader financial challenges that many Americans continue to face.
