American families are struggling with back-to-school costs as inflation continues to put pressure on household budgets, according to a survey released Monday by financial services company Bankrate.
A Bankrate survey of 2,300 adults conducted July 15-17 found that about 31% of back-to-school shoppers plan to go into debt or are already in debt to buy school supplies, clothes and other back-to-school essentials. Of those shoppers who borrow, nearly one in four will take on credit card debt, and about one in eight will use “buy now, pay later” payments to purchase items in installments. (Related article: Housing costs soar in July, accounting for 90% of total inflation)
“I can’t understand what people are living through right now,” Isabella Canales, a 29-year-old who lives in a Dallas suburb, told Bankrate. “When you look at the amount of money they have to pay for uniforms and everything else, it’s just insane.”
Back-to-school shopping season is upon us
Nearly one-third (31%) of shoppers say they will likely go into debt buying back-to-school supplies, according to a recent Bankrate report conducted among more than 2,300 adults in July.
Back to school shopping will be more expensive ⬇️ pic.twitter.com/sqMGJ1nJyO
— Bad Trader (@BadTraderApp) August 19, 2024
While year-over-year inflation recently fell below 3% year-over-year for the first time since 2021, the rate is still well above the Federal Reserve’s 2% target and more than double the 1.4% rate at the start of President Joe Biden’s term.
Despite the drop in inflation, some school supplies are skyrocketing in price, with the cost of luggage, including backpacks, set to rise 15.6% between June 2023 and June 2024, according to CNBC. The share of shoppers who say inflation has changed or will change their purchasing habits in 2024 fell to 32% from 41% in 2022, according to a Bankrate survey.
According to the Federal Reserve Bank of St. Louis, the high percentage of Americans borrowing to buy school supplies is due to the personal savings rate plummeting from 32% in April 2020 to 3.4% in June 2024. Meanwhile, Bankrate reports that nearly half of back-to-school shoppers are practicing “saving strategies,” with 22% of shoppers setting aside money to buy school supplies this fall, for example.
According to FRED, Americans’ accumulated credit card debt reached a record high of $1.6 trillion as of August 7.
“It’s important not to let your guard down,” says Ted Rothman, senior industry analyst at Bankrate. “Credit card interest rates and balances are at record highs, and all of the price increases we’ve seen over the past few years are taking a cumulative toll.”
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