According to the Holiday Consumer Intentions and Actions survey made by the National Retail Federation, American consumers are planning to avoid credit cards for their holiday purchases and use cash, debit cards or check cards instead.
The current mood among American consumers reflects their continuing disenchantment with credit cards, which has been, in the past few months, getting more and more expensive. credit card companies have been busy raising interest rates and fees among their credit card products in an effort to maximize profits before the upcoming new credit card legislations come into play. Credit card holders, already dealing with a slow economy and an increasing unemployment rate, have been hit hard by these changes. It is therefore, no surprise that American consumers are now looking at credit cards as the worst payment option to use for holiday shopping.
The drop in credit card usage is not going to affect credit card companies as well. Retailers themselves are sure to lose some profits as consumers move away from credit cards. Studies have shown that when consumers use credit cards to pay for purchases, they spend more than when they use cash.
As a matter of fact, spending may be going down for American consumers this holiday season. According to a separate survey by the National Retail Federation, they found out that consumers individually expect to spend only $682.74 for holiday shopping. That is a considerable drop of 3.2% compared to last year's figures. Americans can expect fewer expensive gifts this year, it seems.
The survey shows that the expected purchases of expensive items such as jewelry and electronics, the most common high cost gifts, both dropped by 4.7% this year. More consumers are planning to give gifts belonging to the less expensive category this year such as food, candy, rose and personal care and beauty products. Consumers are also being more considerate in giving gifts to those who are having financial difficulties, such as those who have lost a job, and give gifts themselves.
Manager of Media Relations for the National Retail Federation, Kathy Grannis, said that Americans may just opt for making cookies or baking pies to give as gifts this holiday to avoid the awkward situation of spending money on gifts for someone who is unable to reciprocate.
The continuing financial anxiety of American consumers has a lot of bearing in their choices of gift purchases this holiday, but it is not the only factor. Another factor is that consumers are becoming better educated regarding credit card use. According to Grannis, "A lot of Americans have started putting away more savings and spending only what they know they can afford. There are smarter shoppers out there these days."