Retailers across the U.S. are blaming credit cards for projected drops in expected sales this coming holiday season. According to the National Retail Federation (NRF), many Americans are becoming increasingly reluctant to use their credit cards for shopping. Analysts believe that cardholders are becoming wary of the effects of the credit crunch and are taking steps to minimize potential debts.
The NRF disclosed earlier this week that sales are expected to decline by one percent this year as a result of less credit card use. Members of the retail association say that more frugal shoppers are likely to stay clear of their credit cards and instead focus more on cash or debit cards. Experts point out that although the demand for goods always increases during the holiday season, this year can see an increase in the number of Americans veering away from uncontrolled spending.
Critics of credit cards say that the relative freedom card firms have given to millions of cardholders has resulted in Americans chalking up trillions of dollars in debt. Some economists have also openly blamed the credit market and industry for the credit crunch and the ensuing economic recession.
Ellen Davis, the spokeswoman of NRF, disclosed in a press conference that a recent study suggests a growing number of consumers are favoring other forms of payment aside from credit cards. According to research conducted by the NRF and presented to members of the media, the use credit cards have showed a steady decline for the past two years. On the other hand, debit card use has increases significantly since 2002, with more than 40 percent of shoppers using debit cards to pay for items. Cash is also expected to make a comeback as another popular payment method after experiencing steady decline. Of all the major payment methods, checks are the leas common, with less than five percent of consumers using them at present.
However, Davis points out that the one-percent decrease may actually benefit retailers in the long run. The NRF says that while merchants may have to endure fewer sales this year, the decline of credit cards may signal fewer credit debts in the near future. Fewer debts would mean more money for cardholders to use on other items. Davis also explains that cardholders often express dismay over the bills they usually receive in December and January, another reason for the decline of credit card usage.