This holiday season, shoppers are planning to spend more, but also accrue debt.

• During the holiday shopping season, Americans are predicted to overspend, just like every year.
• If interest rates are near their highest point, using credit cards or buy now, pay later options to buy gifts will result in a high cost if there are any missed or late payments.

Americans often splurge on gifts during the holidays.

According to the National Retail Federation, holiday spending from Nov. 1 through Dec. 31 is predicted to reach a record total of $979.5 billion to $989 billion this year.

Despite credit card debt reaching $1.14 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.

Last year, 28% of holiday shoppers still haven't paid off the gifts they bought for their loved ones, according to a holiday spending report by NerdWallet.

How shoppers pay for holiday gifts

During the peak holiday shopping season, 74% of shoppers intend to use credit cards to make their purchases, according to NerdWallet.

In September, NerdWallet surveyed over 1,700 adults and found that 28% will use their savings to purchase holiday gifts, while 16% will rely on buy now, pay later services.

Can buying now, paying later loans negatively impact your credit score?

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

Experts have warned that buy now, pay later loans can be more difficult to manage, potentially leading to financial strain, compared to credit cards, which are easier to monitor, despite their high interest rates.

The problem with credit cards and BNPL

Near an all-time high, the average credit card charge is more than 20%.

Paying in installments at 0% interest can be financially advantageous.

Howard Dvorkin, a certified public accountant and the chairman of Debt.com, stated that "yet, buy now, pay later loans are simply another form of credit, presented as something for free."

Other research indicates that the more BNPL accounts a consumer has open at once, the more likely they are to overspend, miss or make late payments, and have a 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.

"Dvorkin stated that this method is merely another way for financers to profit off consumers, disguising it as a helpful tool."