Holiday spending is down nearly 30% from 2018. Here's why …
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 still flock to the stores, apps and online to make holiday purchases for loved ones, the majority will be relying on credit cards as their currency of choice.
TD Bank surveyed nearly 1,000 consumers, unearthing some interesting statistics and habits.
The most glaring statistic was that 84% of participants claim they plan to use credit for all of their holiday shopping needs and 62% said they own an average of one to three credit cards.
Turning debt into cash-back dollars
When asked why they planned to use credit for the holidays, two-thirds said it was simply for the rewards and perks, with women more likely than men to take advantage of retail store cards.
When you break down what kinds of rewards mattered most to shoppers, cash was still king as 61% said they prefer cash-back rewards.
About half that said they wanted the travel or hotel points from their credit card of choice.
“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 and staying out of debt
While those who participated in the TD survey said they plan to spend $737 on the holiday season, down a great deal from over $1,000 last year, how fast they plan to pay off that debt may shock you.
A whopping 70% plan to pay off their holiday debt within three months, with almost half saying they plan to pay off their bills in just one month. Only 3% said they still haven't paid off last year's debt.
Frugal shoppers gave logical reasons for why they have lowered their holiday budget in the past fiscal year.
Spending too much last year, a change in their financial situation and not wanting to add on additional debt accounted for around 60% of the responses.
An extra 15% said the rising cost of living compelled them to crack down on their spending this year.