More Evidence Consumers Plan to Reduce Holiday Spending

Survey finds more shoppers tightening belts and staying home

November 26, 2008

• Wal-Mart Fined $7,000 for "Black Friday" Employee Death • Online Holiday Sales Dip • Christmas Sales Forecast Gets More Grim • Black Friday Victim's Family Sues Wal-Mart • Giving Without Shopping: Make It a Priceless Holiday • Cyber Monday Spending Jumps 15 Percent • More Evidence Consumers Plan to Reduce Holiday Spending • Retailers' "Desperation" to Mark Black Friday • 'Tis The Season For Stress & Depression • CPSC Offers Toy Safety Tips for Holiday Shopping • Consumers Playing Rebate Roulette This Holiday Season • Beware of Zero Percent Financing • Survey Finds Consumers Wary about Holiday Returns • NYC Fines Retailers for Return & Restocking Fee Violations • Retailers Urged to Curb Violent Video Games • Smart, Careful Shopping Will Help Keep the Season Bright • Video Game Industry Gets a D+ • Negative Option Scams May Snag Online Holiday Shoppers • Retailers' Return Policies Getting Tougher • Safety, Shopping, Charitable Giving Tips • Consumer Reports Holiday Guide • The Gift That Keeps On Taking • Best of All: Giving Without Shopping

Yet another survey of consumers suggest they'll be spending less this holiday season. The latest poll conducted by the Consumer Federation of America and the Credit Union National Association closely reflects other economists' forecasts.

Each year from 2003 to 2007, between 30 and 35 percent of consumers reported that they were planning to cut back their holiday spending. This year, 55 percent said they were planning to reduce this spending as least "somewhat," with 27 percent of all respondents indicating that they planned to spend "much less than last year."

"Consumers are expressing an unusually strong desire to tighten their belts this holiday spending season," said CUNA Chief Economist Bill Hampel. "More say they plan to cut back their spending this year than at any time in the nine years we have been doing this survey. As a result, we may see an actual decline in holiday spending for the first time in many years."

While record numbers of all age and income groups said they are planning to reduce holiday expenditures, women and families with children were much more likely than men and households without children, respectively, to indicate they were planning cutbacks.

Sixty-two percent of women, but only 48 percent of men, surveyed said they are planning cutbacks. Sixty-one percent of households with children, but only 51 percent of households without them, indicated they were planning to reduce spending.

In response to an open-ended survey question asking those intending to spend less for the most important reason for this decision, the vast majority indicated either constrained finances or financial anxiety about the future.

The most frequent responses were: the economy and related economic uncertainty, less money, a desire to save or reduce debt, higher prices, and less income.

"The financial crisis and sustained economic downturn the nation has been experiencing are taking their toll on consumers," Hampel explained. "People are worried about their finances, job loss, and what the future will hold. Amid such uncertainty, they are reacting by reining in their spending plans."

Getting more bang for your buck

"With just a little planning, consumers can substantially reduce their holiday spending without sacrificing holiday quality," said Brobeck. CUNA and CFA suggest the following tips to avoid getting deep into debt during the holidays:

•Make a Budget and a List: Right now, decide how much you can afford to spend and stay within that budget. Staying within budget will be much easier if you make a price list of all gifts and other holiday items you plan to purchase. It's easy to overlook extra expenses for holiday foods, party clothes, holiday decor and postage.

• Comparison Shop: You can easily save more than 10 percent on most items, sometimes considerably more, by comparing prices at different stores. The easiest way to do this is to identify sellers using the Yellow Pages, and then call several. Or use the Internet and compare offers online. But when shopping online, shop wisely. Be sure you are purchasing from a secure site (Look for the "https" in the website address and the locked padlock icon on the toolbar), and review emailed statements for accuracy as you receive them.

• Pay Off Debts Quickly: You're less likely to overdo it if you pay in cash. If you must make holiday purchases using credit, use a lower-interest card and pay off this debt as soon as possible early next year. Don't borrow more than you can repay in several months. Remember that credit card debt is relatively expensive. And if you only make the required minimum monthly payment, you may never pay off the debt.

• Plan for Next Year by Opening a Christmas Club Account: While these accounts do not pay much if any interest, they provide a practical way to save small amounts over time. Ask your credit union or bank to automatically transfer funds from your checking to your Christmas Club account every month. The discipline of saving reinforces your good budget intentions.

• Be Smart About Gift Cards: If you don't use a gift card promptly, it can lose value in one of several ways: It can expire and become worthless; monthly maintenance fees can erode its value to zero; the store that issued it can go bankrupt or stop honoring gift cards. If you give or receive a gift card, read the fine print. And remember, a gift card is handy and convenient, but like cash, if you lose it, it's gone.

• Pay Attention to the Return Policy: Some stores are tightening their policies. Pay attention to the return policy when you make a purchase; keep receipts and note time limits, restocking fees, and other factors that may affect your recipient.

• Find Low- or No-Cost Ways to Celebrate: Adding a few changes can ease the strain on your spending budget. For example, draw names to limit the number of people for whom you purchase gifts; give homemade items; make your own gift wrap; organize a potluck rather than trying to make, and pay for, the entire holiday meal.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Share		Follow us on Twitter.

Back to the top |