Holiday Shoppers Plan to Leave Credit Cards at Home

By Eva Norlyk Smith, Ph.D.

January is a month dreaded by all. T’is the season after the Season, a time of reckoning, when we’re left with long dark days, woefully expanded waistlines, and a mounting pile of credit card bills.

Every Holiday shopping season, we Americans go through the same ritual, wowing not to overspend, and then proceeding to swipe away like there is no tomorrow. However, according to a new survey by the National Foundation for Credit Counseling (NFCC), this year may be different. With the biggest spending season of the year just around the corner, more consumers are planning to leave their credit cards at home and pay by cash.

In the survey, which polled more than 3,800 consumers at the end of October, more than two thirds (68 percent) planned to pay in cash for their Holiday purchases, and ten percent planned to utilize lay-away programs. Only 22 percent said they were going to charge their purchases to their credit cards, and out of this group, 12 percent said they would pay off the bill in full when it arrived.

It remains to be seen whether Americans will keep up on that resolve or if it will go the way of the decision not to binge on all that wonderful, luscious Holiday food. Still, there are many reasons why this year may be different.

“Consumers are faced with spending decisions unlike ever before,” says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling (NFCC). “Many have had their access to credit limited by issuers closing accounts or restricting credit lines. Others have self-imposed spending restrictions, instead choosing to pay down existing debt.”

According to previous surveys by the NFCC, consumers have indeed begun to cut back and make lifestyle changes in order to stay afloat. In a July survey, almost three quarters of respondents said that the one thing that would make them feel more financially secure would be to have less debt.

Still, Cunningham notes, the holiday season may well tempt consumers to revert to old spending habits. The holiday season has traditionally been a time when many consumers rack up additional credit card debt, in some cases even as they are still paying off the holiday spending from the previous year.

So will our intentions to wean ourselves off our addiction to plastic translate into reality once we hit the stores? According to the NFCC, one third of Americans has no savings, and let’s face it, without money in the bank, shopping for Holiday gifts and parties presents a challenge—unless, of course, you’re planning to hand out coal this year. Still, as Cunningham points out, in the face of a continuing difficult economy, higher credit card interest rates, and tighter terms, foregoing of those Holiday shopping indulgences may be more important than ever.

“Spending during the next two months can make or break many Americans financially, with the ramifications of poor decisions following them for months or years,” Cunningham notes. “This is likely to be a holiday shopping season unlike any in recent history, with none of us knowing the outcome until the data arrives in January. It is our hope that consumers shop wisely, remembering that digging a financial hole is not a gift to anyone.”

Published: November 13, 2009