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BMO Harris Bank Study: Young Families in Illinois Optimistic About Paying Off Holiday Debt

CHICAGO, IL--(Marketwired - Dec 13, 2013) -

  • While 13 percent of parents with young children expect to take on debt during the holidays, more than half expect to make up for it in the new year
  • BMO Harris Bank offers tips for keeping spending and debt in check

A new survey of parents in Illinois released today by BMO Harris Bank found that 13 percent expect to take on debt during the holiday shopping season, although 56 percent are confident about paying most of it off as early as January. 

The inaugural holiday spending report from BMO Harris found that most parents in Illinois (85 percent) set a budget for the season. A notably lower percentage of parents (48 percent) expect to make impulsive purchases compared to the national figure of 58 percent.

The report, which surveyed parents with children under 10 years old, found that in Illinois:

  • 36 percent of parents have a fixed budget, and 49 percent say they have a flexible one
  • 9 percent have not created a budget for holiday spending at all
  • 47 percent of Illinois parents, say they regret how much they spend come January. This compares to only 37 percent at the national level

"This stretch from Thanksgiving and into the new year can have us reaching for our wallets more often than other times of the year. Shoppers shouldn't underestimate the usefulness of a budget in keeping track of where those dollars are being spe nt," said Julie Curran, Regional President, BMO Harris Bank. "It's encouraging to see that many parents in Illinois are feeling confident they will be able to pay off their holiday debts come January. This is definitely the right approach; it's the sooner, the better when tackling credit card debt."

Nearly half of those who said they'd take on debt (44 percent) justified doing so by the fact that it is the only time of year they spend outside their means. Slightly more than 25 percent said they had to take on debt to be able to afford purchases, and the same number cited social pressure to spend during the holidays. 

Nationally, the survey reported that:

  • 38 percent of parents have a fixed budget, and 47 percent have a budget that is flexible
  • Only 13 percent of parents have not created a budget for holiday spending at all
  • 58 percent of parents expect to make impulse purchases during the holidays
  • The 'holiday hangover' affects 37 percent of parents, who say they regret how much they spend come January

Michael Gregory, Head of U.S. Economics, BMO Capital Markets, noted that after several years of curbing their credit appetites, households finances are now in much better shape. Combined home mortgages and consumer credit peaked near 124 percent of after-tax incomes at the end 2007 and the ratio finally slipped below 100 percent at the end of 2012, where it seems to be stabilizing.

"Having gone through this multi-year restructuring, it's important that consumers maintain healthy balance sheets by using credit cautiously, making sure their payments fit well within their family budgets not only at current interest rates but should borrowing costs rise in the future," Mr. Gregory added.

Visit the BMO Harris Bank Learning Center to learn more about holiday budgeting and tackling debt and other tips for managing your expenses, including:

  • Cut the Extra Trimmings: Keep an eye out for the inevitable sales that come out around Black Friday, Super Saturday and Cyber Monday. Suggest doing a gift exchange rather than getting presents for each person
  • Use Tools to Stay on Track: BMO Harris Total Look is an online tool that lets you set spending and savings goal and keeps track of where your money is going
  • Plan Your Travel: If you're flying to see family, book early or be flexible with your dates and times to get the best deal. Or, consider a "staycation" and spend the holidays in your hometown
  • Pay off Debt Early: Make more than the minimum payment on your credit card debt, which will knock down the amount of interest you'll pay over time. This will also help to free up credit, which can improve your credit score. 

The BMO Harris spending survey was fielded online between November 22nd and 29th. In total, 993 parents with children under 10 were interviewed, including an oversample of 95 from Illinois. Results for a probability sample of this size would be accurate to ± 3.1%, 19 times out of 20.

About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throu ghout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris Bank® is a trade name used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $537 billion in assets (as of October 31, 2013).
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