With the holiday season right around the corner, it seems many Americans might be saying “Bah, humbug” to the time-honored tradition of gift giving, with planned spending down nearly 30%, according to the second annual Holiday Retail Report released by TD Bank.
But as shoppers flock to the stores, apps and online to make holiday purchases, the majority will be relying on credit cards as their currency of choice.
TD Bank surveyed nearly 1,000 consumers to find out how they’re shopping for this holiday season and how they plan to pay for gifts.
Shoppers revealed that they have an average of just over $735 dollars in mind for holiday-related expenses this season, with most (55 percent) adding they’ll use their credit card several times a week or more, later this year. For those planning to shop with plastic, the average spend increases by nearly one hundred dollars to $840.
Furthermore, 66% of buyers are leveraging their cards specifically for rewards and perks, with 46% using plastic because it’s easier to use than cash.
Shoppers are also conscious of paying off the debt they’ve accrued quickly. Last year 70% of respondents who financed their holiday spending, paid off their holiday debt within three months and 45% said they did so within just one month.
“The holiday shopping season is fun and exciting, but for many it’s also stressful,” said Mike Kinane, Head of U.S. Bankcard for TD Bank. “For consumers who are determined to find perfect gifts for their loved ones while sticking to a budget, the season can present a challenge to balance giving with spending. Credit cards can make the shopping experience more seamless and will ultimately place some money back in shoppers’ pockets through rewards and perks, but they must be used judiciously to avoid accruing significant debt.”
Spending like Scrooge
Among shoppers surveyed this season, overall planned spending is down by nearly 30% this year, as opposed to 2018 where consumers said they spent more than $1,000 on holiday gifts.
Shoppers are spending frugally, with most of their planned purchases allocated for only their significant other, children and close friends. According to the survey, they plan to spend:
In fact, only 20% plan to buy a gift for their co-worker, 13% will bring a gift for their holiday party host or hostess and 6% plan to buy a gift for their babysitter or nanny.
Perhaps shoppers are reigning in their gift giving in exchange for experiences. According to the survey, there’s a surge in celebrations and family gatherings. More than a quarter of Americans say their spending on dining out, clothing and entertainment spikes during the holiday season.
Mr. or Mrs. Claus – Who’s the Bigger Holiday Spender?
Despite historical stereotypes, men are planning to spend nearly $200 more than women this season ($834 vs $643 respectively). In addition, men were three times as likely to say that they intend to make a major gift purchase costing $1,000 or more (19% versus 6% respectively).
On the other hand, women seem to be more aware of how much they’re spending and sensitive to what they’ve spent on holidays in the past. Women are more than twice as likely as men to say they plan to spend less this holiday season than last year (22% versus 10% respectively).
Women are also savvy users of store cards, as they’re significantly more likely than males to have and leverage retail credit cards, giving them access to special discounts and rewards.
“Regardless of how much you plan to spend this holiday season, it’s important to remember that the expenses you accrue now can impact your financial situation well into the new year,” said Kinane. “For example, a credit card with a 22% APR will charge shoppers $15 per month on a balance of $840. If shoppers take too long to pay their balance off, they’re likely to cancel out any deals they were able to take advantage of during the holiday season.”
The study was conducted by research company Maru/Matchbox. Respondents were composed of a targeted panel sample of 987 Americans who participate in holiday shopping. A random sample of this size would have a margin of error of +/- 3 percent. The data was weighted by age, gender and region to reflect the national population. The online survey was fielded from October 29th to November 5th, 2019.
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