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Statistics, studies from across the Web and this blogger’s research all show that more people are using cash or debit this year than credit cards for their holiday shopping. (I’m proud to say that a few CreditShout.com readers, after reading this article about using Rewards Credit Cards on Black Friday, told me they will be swiping this year — with cash to pay off their credit cards immediately.)
Morpace Study of Black Friday Spending
A Morpace Omnibus Study on consumer spending confirms this blogger’s research and informal survey that fewer people are using credit cards this year. According to the Morpace study, 40% of consumers do not plan to charge any holiday purchases this year, compared to 35% last year. And 53% of consumers earning $50,000 or less will not use their credit cards, compared to 28% of consumers earning six figures or more.
While credit card spending may be more conservative, the Morpace study says that holiday budgets will remain about the same as last year. Fifty-eight percent of the people surveyed say their budget is about the same. Twenty-nine percent of holiday shoppers say they’re cutting their budget and only 13% are increasing it this year.
When I polled my network, well over half (closer to 75%) also said their budget was the same. Some said they didn’t set budgets at all, but planned to keep spending in check by using cash only and giving homemade gifts whenever possible.
With less customers using credit cards, we’re also seeing a return to “old-fashioned” shopping options, such as store layaway programs and “Christmas club” type savings accounts. The most popular savings accounts seem to be through banks. Morpace reports that alternative payment options (such as layaway or Christmas club cards like those offered by Toys R Us and Sears) are not expected to influence people’s choice about where to shop.
Real People Talk About Credit Card Use and Black Friday
Let’s look at what some real people say about their holiday shopping plans this year:
Debi Brim of Indianapolis, Indiana, says: “We’ve been cash-only for a few years. There is no way to overspend, like with credit. I just refuse to take out a loan for gift buying anymore.”
To stretch her budget dollars, Brim gives gifts for the whole family to enjoy (board games, etc.) or what she calls “the simple things like Matchbox cars, coloring books and crayons, or travel games.” She says, “I can’t compete with Santa, who brings the big stuff, so I don’t even try.”
Mysti Guymon, a mom blogger at Thanksgiving 365, says, “We maintain a cash-only policy. We earn rewards with our bank debit cards and cash back on purchases. Why use credit when you have that? Our budget hasn’t really changed, but we’ve changed how we are doing gifts this year – many are handmade. For the kids, we are doing fewer gifts, but looking at higher quality items.”
Danielle Myers, a savvy shopper in Albany who plans to brave the Black Friday crowds from 9 AM to 9 PM this Friday, has her strategy all mapped out to save money — but doesn’t forget the reason for the season, either. “I’ll use credit to get the points on my credit card and then pay it off. We set a budget for each person beforehand and just do the best we can within that budget. The holiday isn’t about giving the gifts or receiving them.. It’s about spending the time with your loved ones.”
Why I Use Credit Cards for My Holiday Shopping
Whether using cash vs. credit cards, the number one goal to control holiday spending is to create a realistic budget.
If you can make a budget and stick to it, you will spend no more using your credit card. In return, I think yo can get way more back than just your credit card points. (Though those are nothing to sneeze at.)
As we discuss in our article Top 11 Hidden Credit Card Perks, most major credit cards offer you tons of consumer benefits that are great around the holiday season. The include purchase price protection, extended warranties, accident protection, and more.