Shoppers are leaving home without it this year.
An estimated 28.3% of consumers will use credit cards to pay for holiday gifts this year, according to a survey by the National Retail Federation and BIGresearch. That would be a drop from the 31.5% of consumers who paid with credit cards during the 2008 holiday season.
A story in today’s Wall Street Journal reported that more people are leaving their cards at home because of climbing interest rates on cards, lower spending limits, and canceled accounts.
Today American Express (AXP) was down 5.3%, Discover Financial Services (DFS) was down 2.9%, Visa (V) down 2.7%, and MasterCard (MA) down 2.6% as part of a general retreat among financials. Â All these, however, did fall more on the day than the 2.1% drop in the Financial Select Sector SPDR (XLF).
lotteollie…
Amen, brother!
Guys, trust me on this. The people that read and listen to Jim are not the target customers for the credit card companies.
I know I shouldn’t be, but I’m amazed at the reasons stated for not using a credit card: “climbing interest rates on cards, lower spending limits,…”. This says to me that the folks interviewed were looking to spend what they don’t actually have. Christmas snuck up on them, I guess. I do believe some people are starting to step away from debt, though. Personal debt, at least… If enough do it, maybe the CC companies suffer some in the short term, but they’ll adapt or they will go away.
Or get my “rich” Uncle Sam to bail them out.
Is this a another ripple effect of the credit crisis on consumer spending? Consumer’s passion for not to speak of their ability to finance spending this holiday season has already been brought into question. Since it is known that people spend more when using credit cards, is this a further negative on spending that will further soften December retail numbers and add down draft to the economy and markets?
I don’t really see a 3.2% drop as that big considering everything happening, lot of which is brought on by the credit card companies themselves (trying to beat the new laws and such like protect themselves from defaults). And besides it might even turn out better for the credit card companies in the long run with higher interest rates to people that are better credit risks.
Personally I’m like the two above. I use a credit card for as much as possible because it pays me, not the other way around, but my main reason to do it is that I can download all the transactions into Quicken and have it track where my money goes. So I use them to be better financially, not worse. If they ever start to charge me I will switch to debit cards, which I can still do the downloading.
viwi…you’re not the only person. I always use my credit cards to pay bills, grocery and almost everything except rent. I get cash back every time I use my cards. I pay them off every month. They are merely for convenience purposes. I don’t have to pay annual fees either.
It’s all about discipline.
It is hard for me to judge, since I always pay my the full amount on my credit card bills, and all my credit cards provide me with more than 1% dividend on all purchases. So, I never use checks or cash, when I can use credit cards.
But, I guess, I am just one in millions …