Americans Give Up The Credit Card For The HolidaysPosted: November 30, 2009 at 5:35 am
Just over one-quarter of shoppers who made purchases over the Thanksgiving weekend used credit cards. Thirty-nine percent used cash and the balance of the shoppers used debit cards which are a cash-equivalent, according to survey conducted for Reuters by America’s Research Group.
The news is bad for retailers.
Consumers are not willing to go into debt to buy gifts this year. They are limiting themselves to the money they have stored in their mattresses. Among the unemployed and underemployed that cash is in very short supply. Among the middle class the supply is not likely to be much better.
The habit of going into hock during the holidays to spread cheer to loved ones and co-workers is a time-honored tradition in America. Consumers end up working the first half of the year after the Christmas season paying down large credit card balances. In 2009, credit Americans have come to loath credit because they believe that it is a road to economic ruin in a period in which they cannot borrow against the value of their homes and in which their credit card companies are encouraging them to reduce their balances.
The American consumer economy has not been a cash economy for years. There are over 600 million credit cards in circulation in the US according to the Nilson Report. The trend today is that the balances on those cards is going down. Americans want savings to be tucked away in the event that they lose their jobs. High debt is viewed by many as irresponsible. That was hardly the case two years ago.
American are telling retailers that they will not spend beyond what they have in their wallets. That will hardly make the holidays bright for stores that already face fewer sales than they had last year.
- Douglas A. McIntyre
http://247wallst.com/2009/11/30/americans-give-up-the-credit-card-for-the-holidays/