The holiday shopping season is approaching. According to The National Retail Federation (NRF), on average, consumers are expected to spend almost $700 on holiday gifts this season. The NRF says sales should be up 2.3%, which is much better than last year’s increase of 0.4%.
The holiday season is typically the time when consumers rack up huge amounts of credit card debt due to extreme spending. But Moreplace Market Research says that 40% of consumers plan to ditch their credit cards when shopping for the holidays, and use cash instead.
With cash, you don’t have to worry about getting into debt – at some point, you’ll run out of cash, which will force you to stop shopping, whereas with credit cards, there are no boundaries.
As the economic recovery continues to stall, embracing tactics (like using cash only) that ensure the accumulation of small amounts of debt, is a wise idea. The unemployment rate still remains high at 9.6% and along with the weak dollar and the weak housing market, we’re still not out of the woods yet when it comes to the economy.
The survey also found that 15% of shoppers plan to use credit cards to make all of their purchases this holiday season – not a good idea! Come January, when the credit card statement arrives in the mail and you have no idea how you’re going to pay off the balance, that’s when the trouble starts. Interest and late fees will accrue and not to mention the damage to your credit score.
Set aside a strict budget for holiday shopping. For help in creating your budget, use our Expense Calculator. If you determine that you can spend $500 this holiday season, then set aside $500 in cash – when you shop, leave your credit cards at home to avoid any temptation of spending over your budget.
Here are some quick tips to avoid holiday debt:
1. Make a list of exactly what gifts you need to buy, to prevent you from impulse spending
2. Save all receipts, in case items need to be returned
3. Don’t feel pressured to purchase gifts for everyone you know – a thoughtful card (which is cheaper than a gift) goes a long way!
Continue to follow HelpSaveMyDollars.com throughout the entire holiday season, as we plan comprehensive content on how to save money this season and sign up for our newsletter!