Consumers expect to spend less this holiday season than last, even as shopping started earlier than ever and crept into Halloween because of the coronavirus pandemic. A U.S. News survey of 1,500 consumers in November about holiday spending plans revealed that 33% plan to spend less this year than last.
A little more than half of those surveyed said they intend to spend less than $499 on holiday gifts, food, travel and decor. The survey also asked consumers about how they plan to make purchases and whether they expect to carry debt after the holidays.
Other key findings from the survey:
- Most consumers said they don’t envision bringing holiday debt into 2021: Only about 7% plan to carry a balance or take out a loan for the holidays.
- About 45% of respondents said they plan to purchase most of their gifts from online retailers big and small.
- More than a third of shoppers expect to use credit cards as their primary method of payment.
- A quarter of consumers intend to redeem credit card rewards for holiday expenses, and 24% will use credit cards to earn rewards.
A little more than half of consumers said they plan to spend less than $499 on holiday expenses, compared with 48% who intended to spend that amount in 2019.
About 45% of consumers plan to do most of their holiday shopping with online retailers big and small. Small businesses are the primary shopping source for 16% of consumers surveyed.
Most respondents said they plan to pay with plastic this holiday season; 35% expect to use credit cards; and 31% intend to shop with debit cards as their primary method of payment.
Debt is not part of the deal for most holiday shoppers. Just 7% said they plan to carry a balance for holiday expenses, compared with 8% in 2019, and less than 7% expect to take out a loan for holiday shopping.
Most consumers said they prepare for holiday shopping, whether that’s making a shopping list, budgeting, comparison shopping or earning extra money for gifts.
Nearly 60% of people said they have either started saving for the holidays or have saved all they need for holiday expenses.
Among respondents, 24% said they plan to use credit cards for holiday spending to earn rewards, and about 25% intend to redeem credit card rewards for holiday expenses.
- U.S. News ran a nationwide survey in November 2020.
- The survey sample came from the general American population, and the survey was configured to be representative of this sample.
- The survey asked 10 questions related to holiday spending and credit cards.
Helpful Holiday Credit Card Features for 2020
If you’re planning to shop online more this year but spend less, holiday credit cards are a good tool to have. A credit card for holiday shopping can help you save as you earn rewards and redeem them for holiday gifts; finance your purchases interest-free; and even get free shipping.
Earning rewards: The holidays are a season of giving, but there’s nothing wrong with earning a little something for yourself. A rewards credit card can help you turn holiday expenses into cash back, travel and other rewards you can use later.
Redeeming rewards: If you have rewards to use, redeeming them could make your holiday budget a little more jolly. Cash back cards allow you to easily redeem your rewards for statement credits, which you could use to pay yourself back for holiday expenses.
Some travel credit cards allow you to use rewards for gift cards and other giftworthy purchases. That could be valuable if you’ve stockpiled travel rewards but don’t plan to use them this year.
Introductory offers: Cards with a 0% annual percentage rate period can give you time to pay for holiday purchases interest-free, usually at least 12 months. This could be a risky move if you can’t pay off the balance before interest applies, but it can help you manage expenses if you have a payoff plan.
Free shipping: Some credit cards offer free shipping and returns, which can take some of the friction out of online shopping. Many consumers plan to shop online this holiday season because of the coronavirus, and cards that provide free expedited shipping from retailers can help buyers make last-minute purchases.
How Else Can a Holiday Credit Card Help?
Credit cards aren’t the only way to pay for holiday expenses, but they can be a convenient and safe option. Cardholders can take advantage of protections and other features that can reduce stress this holiday season.
Fraud protection. Every card purchase puts you at risk for fraud, as thieves can steal your card information online or when you use your card at a store. But a debit card gives criminals a direct line to your checking account and limits consumer protections from loss or theft.
Extended warranty protection. Buying big-ticket electronics? The retailer will likely ask if you want to purchase an extended warranty for your item. If your credit card offers this coverage, you can confidently say no and save money without missing out on protection.
Price protection. Price fluctuations are common around the holidays as retailers compete for your dollars. Frustratingly, a price might drop right after you buy a gift. A credit card with price protection could reimburse you if the item’s price lowers shortly after your purchase. This benefit is fairly rare but valuable.
Travel perks. If you’re not staying at home, benefits from a travel credit card can make the hustle and bustle of holiday travel easier. Travel cards may come with benefits such as free checked bags, access to airport lounges, hotel room upgrades and travel insurance policies.
How to Choose and Use a Holiday Credit Card
Any credit card you choose should offer year-round value, but if you’re getting a holiday credit card, you will want to account for your holiday spending.
When you choose a credit card for holiday spending, evaluate your shopping plans. If you shop mostly online, for example, a card from a major online retailer could net hefty post-holiday rewards. If flexibility is important, a flat-rate cash back card might be the ticket.
You’ll also want to think about what type of shopper you are to select the right holiday credit card. Comparison shoppers should look for a card with price protection, which can let you make a purchase now and worry about a refund for the price difference later.
Of course, the type of credit card you choose matters less than how you use it. Look before you leap, and make a plan to pay off your holiday purchases before you start shopping.
After all, earning a mountain of rewards during the holidays isn’t helpful if those rewards come with a mountain of debt.