Experts predict millennials will have a positive outlook during the holiday season.

• During the holiday shopping season, Americans are predicted to overspend, just like every year.
• A survey indicates that many millennials, who are now parents of school-age children, are taking the lead.
• If credit card balances are not paid off promptly, purchasing gifts using buy now, pay later plans will result in high costs.

Parents tend to splurge on their children during the holidays.

According to a report by TransUnion, 63% of millennials, who now have school-age children, plan to spend the same or more on holiday shopping as last year, which is the highest share of any generation.

A TransUnion poll of 3,000 adults in October found that millennials are more likely to report an increase in their income over the past few months and expect their earnings potential to rise again in the upcoming year.

TransUnion's senior vice president and head of global research and consulting, Charlie Wise, expressed a lot of optimism regarding the holiday season.

Despite the rise in the broader unemployment rate, recent wage gains have outpaced inflation, resulting in a steady employment situation, according to Wise. This confidence in having a job will translate into increased spending.

In 2024, Thanksgiving meals are predicted to be less expensive. Trump's victory could impact your healthcare. Remote work is enabling Americans to embark on longer journeys.

According to Wise, millennials are expected to spend the most during this holiday shopping season and will likely have the greatest impact.

The National Retail Federation predicts that holiday spending will reach a record high of between $979.5 billion and $989 billion from November 1 to December 31.

Despite credit card debt reaching $1.17 trillion, holiday shoppers anticipate spending an average of $1,778, which is an 8% increase from the previous year, according to Deloitte's holiday retail survey.

In September, a survey by NerdWallet found that 28% of holiday shoppers had not yet paid off the gifts they bought for their loved ones the previous year.

Holiday spending may lead to holiday debt

NerdWallet found that while 74% of shoppers use credit cards to buy holiday gifts, 28% will use savings and 16% will use buy now, pay later services. Survey respondents could choose multiple payment methods.

Consumer finance's "buy now, pay later" category is rapidly expanding and is predicted to gain even more popularity in the near future, according to recent data from Adobe. Adobe predicts that spending on buy now, pay later will reach a new single-day record of $993 million on Cyber Monday.

Consumers may struggle to manage multiple buy now, pay later loans with different payment dates, experts have warned, potentially leading to financial difficulties, even more so than with credit cards, which have simpler payment schedules, despite their high interest rates.

At 0% interest, paying in installments can be financially advantageous, according to Marshall Lux, a senior fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School.

"If used properly, it's great," Lux said.

He stated that many individuals would stretch out their purchases over an extended period, leading to high interest rates and a debt cycle.

Other research indicates that the more buy now, pay later accounts consumers have open at once, the more likely they are to overspend, miss or make late payments, and have poor credit history.

In some cases, the interest rates for missed payments can be as high as 30%, which is comparable to the highest credit card charges.