• One of the big questions for retailers is: What will happen when shoppers' holiday bills come due?
• Retailers are paying closer attention to factors that influence consumers' debt load, including rising interest rates and the resumption of student loan payments.
• Credit card delinquencies have ticked up, though they are not as high as during the Great Recession.

Shoppers are springing for holiday gifts and decorations, but bustling mall traffic, full shopping bags and large hauls under the Christmas tree could hide a challenge for retailers: rising credit card balances and what that may mean when the bills come due.

This holiday season, shoppers who ring up purchases on credit cards will pay more interest if they carry balances from month to month after the Federal Reserve's string of rate hikes. The cost of borrowing has climbed as credit card delinquencies — the number of people not making payments toward their balance — have ticked up, though the metric remains below the highs of the Great Recession. In addition, student loan payments have resumed after more than three years of a pandemic-related pause, adding to the debt that many Americans are trying to pay off.

Shoppers making their holiday purchases on credit will do so at a time when consumers are taking on more debt — and face bigger risks from carrying a balance. Retailers will not have a clear idea of how those factors will play out until January or February, said Aditya Bhave, senior U.S. economist for Bank of America.

"In the first quarter, the big question will be how much will delinquencies rise," he said.

But Bhave said the American consumer has defied "doom and gloom" before and could do that once again. Consumers have kept shelling out, fueled by post-Covid revenge spending and a hunger for experiences, such as tickets to Taylor Swift concerts. They most recently surprised Wall Street with stronger-than-expected September retail sales.

Already, investors and retailers have paid closer attention to credit card payments — and some have cited them as a concern. Macy's Chief Financial Officer and Chief Operating Officer Adrian Mitchell said on a late August earnings call that the department store operator expected credit card delinquencies to tick up in a more typical environment, but they have risen "faster than planned." The company, which has its own branded credit cards, has seen lower revenues from those cards because of costs associated with bad debt and related write-offs.

Mitchell said student debt, auto loans and mortgages have all become bigger burdens in a high interest rate environment.

Kohl's CFO Jill Timm said on the company's earnings call that the retailer has seen the amount that customers are paying as a percentage of their outstanding balance drop on credit cards — but said some of the decline was expected as the economic backdrop got tougher and people had less in their bank accounts. She said those payment levels, however, are still above 2019 levels.

On Walmart's August earnings call, CEO Doug McMillon also said the retailer faced debt-related challenges. He mentioned student loan payments and higher borrowing costs among factors pressuring households, even as the job market, wages and disinflation help mitigate those factors.

Tim Quinlan, an economist for Wells Fargo, said he thinks people using credit cards "are not yet fully awake" to the rising interest rates and may not realize how they will be affected until they see a bigger balance.

Average interest rates on U.S. credit cards hover at about 21% for the most recently reported quarter, which ended in August, compared with about 16% in the year-ago period, according to the U.S. Federal Reserve Board. For retailer-issued cards, the average interest rate is nearly 30%, a record high, according to data from Bankrate.

"That's a huge tax on the capacity of those households to spend," Quinlan said.

Celebrations, but with bills attached

So far this season, holiday forecasts and surveys of shoppers have painted a picture of a U.S. consumer who wants to celebrate and buy gifts but is also mindful of the budget.

Consumers plan to spend $875 on average on gifts, decorations, food and other seasonal purchases this holiday season, according to a survey of roughly 8,100 people conducted in early October by Prosper Insights & Analytics for the National Retail Federation, a large industry trade group. That's $42 more than consumers said they planned to spend in the year-ago period and about the same as the average holiday budget over the past five years.

Other surveys predicted a pullback in holiday spending among a larger chunk of consumers. Nearly a third of U.S. adults said they plan to spend less on the holidays this year, compared with 20% who said they plan to spend more, according to a September Morning Consult survey of about 2,200 people.

Jaime Toplin, financial services analyst at Morning Consult, said the firm has seen the percentage of U.S. adults applying for new credit cards, and the percentage reporting that they or someone in their household have credit card debt, remain pretty stable month after month.

Yet she said it's unclear if shoppers may make riskier moves during the peak holiday season, such as racking up higher credit card balances than they can afford or borrowing in other ways, such as through buy now, pay later. Those plans, through companies such as Klarna and Affirm, break up payments into installments but can come with fees.

About 36% of U.S. adults said they are considering buy now, pay later for holiday purchases this year — up from 28% last year, according to the Morning Consult survey.

Toplin said stretched customers can wind up mixing borrowing methods, with balances that get harder to pay down because of interest. About 36% of buy now, pay later users paid for their plans with a credit card in September. A shopper could do so to boost their credit card reward points — or the move could be a potential sign of financial distress, she said.

Bhave, the Bank of America economist, said credit card delinquencies, not debt, are a better measure of consumer health. Inflation has lifted total spending, but shoppers have also felt more comfortable spending, with higher wages and stable jobs. Those factors contributed to total credit card debt hitting a new high of over $1 trillion for the first time earlier this year, according to the Federal Reserve Bank of New York.

"It's the labor market, the labor market, the labor market," he said. "That's by far the most important thing when it comes to consumer spending."

He said a solid labor market makes him feel generally optimistic about the holiday outlook and the odds of a "soft landing," an economic slowdown that tames inflation but does not cause a recession.

Even so, some holiday shoppers are proceeding with caution. Jolene Victoria, 42, of New York, said she plans to spend about $250 on gifts this holiday season, about the same amount she spent last year. Yet she's looked for ways to save.

She bought her first Christmas gifts in August and September, since she spotted deals such as headphones that were on sale. She snagged a cheaper Amtrak ticket to visit her dad in Virginia for Thanksgiving. But she decided to stay local for Christmas instead of flying to Florida like she did last year.

Early this year, after seeing the effect of rising interest rates, she said, she focused on paying off a small amount of debt on her credit card.

"You see how much interest you're paying and you think, 'Oh no,'" she said.

Instead, this holiday season, she's stuck to paying in cash or with a debit card to limit herself to the money she has on hand.

— CNBC's Gabriel Cortes contributed to this report.