Santa Claus is coming to town and that doesn’t bode well for consumers everywhere. The holiday season has now become synonymous with immense debt payments about one month after, creating enormous stress and resentment to what is supposed to be one of the happiest times of the year.
Is this year different? According to a new study, Christmas shoppers might be more prudent when it comes to their credit card usage than years prior because nearly half have stated they will be putting away their plastic.
A new study by Equifax, a global online credit information provider, discovered that 49 percent of Britons will not be using their credit card(s) for holiday purchases. Forty-five percent, meanwhile, have produced a plan to only use cash for their seasonal shopping. Both are positive numbers for a society that is entrenched in consumer debt.
“When it comes to Christmas spending, 30% of consumers who responded to our survey said they have a ‘spend now, pay later’ attitude,” said Neil Munroe, External Affairs Director at Equifax, in a statement. “This could lead to future difficulties if they don’t have the means to pay off those debts. But with 45% of respondents saying they will only use cash and savings, there does seem to be a sense of financial prudence around Christmas 2013.”
Furthermore, close to half (49 percent) said they will be spending the same amount they did last year, while nearly one-third (29 percent) are reducing their Christmas budgets. Fewer than one-quarter (23 percent) plan on spending anywhere from $492 to $817.
A similar poll was conducted by Gallup last month. It found that Americans are planning to trim their holiday spending budgets. Consumers estimate they will spend a little more than $700 on gifts this year, down from an estimated $786 in the month prior – it’s also down from its 2007’s $866.
Previous studies have highlighted the average consumer’s plans to cut down on their Christmas shopping. However, when January rolls around, a lot of polls keep suggesting that consumers spent more than what they budgeted for, which is understandable considering how easy it is to rationalize using credit cards for seasonal purchases as well as how many cards people own.
An infographic recently published looked at credit cards in the U.S. It found that the average number of credit cards held is 3.7: 72 percent of consumers have at least one credit card, while 20 percent have four or more credit cards. The average debt per adult is $8,220, the average debt per card is $4,878 and more than two-thirds (39 percent) carry credit card debt from month to month.
To avoid the New Year hangover, it is recommended to establish a detailed list, use cash as much as you can, create a spending limit and spend within your means. Although it is one month of the year, Christmas shopping can have lasting effects that can even head into the following holiday season if you don’t shop wisely and responsibly.