December 03, 2009
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News: Americans Are Changing Spending Habits
Americans are changing their spending habits and the method by which they are paying for their purchases. With the Holiday Shopping Season upon us, many consumers have committed to sticking to their budgets and switching from credit card to debit. A recent survey by the National Retail Federation and BIGresearch, the number of consumers who plan on using their credit card to buy gifts is 28.3 percent down from the 31.5 percent who used their cards last year. Many Americans who have experienced credit problems over the past year will be turning to "bad credit" credit cards for their holiday shopping. These cards typically require consumer to front load the cards which becomes the credit limit. Nevertheless, for those Americans who have lost their jobs over the past months, they may have no alternative but to depend on credit to get them through the holiday season.
A downward trend in credit card spending has been visible during the past year. Visa and MasterCard transactions dropped for third quarter 2009 to $313 billion; an 11.58 percent decrease from third quarter 2008. On the other hand, Visa and MasterCard debit card transactions increased to $303 billion; a 5.21 percent increase from same period 2008. Recent Black Friday card transaction statistics indicate that although there was an increase in spending from 2008, credit card spending was down while debit card transactions increased by 9 percent. For those online shoppers, debit cards are also an option and a great way to stick to a budget.
Consumers appear to be more cautious this holiday shopping season and are becoming savvier about finding alternatives to credit card spending. Retailers have made it easier for shoppers who are trying to avoid the use of credit by bringing back the once popular "lay-a-way" plan. Shoppers love the lay-a-way plan which has increased traffic in their stores as well. Homemade gifts have also experienced renewed interest as craft and hobby stores have become more aggressive in sales promotions.