Holiday Projections Point to a 10% Decrease in Credit Card Use
More bad news for the credit card industry. A recent survey commissioned by the National Retail Federation revealed that fewer American consumers will be using their credit cards this holiday season.
This is no doubt that this is a continuation of the trend we have been seeing where consumers across the nation are growing ever more cautious with their use of credit cards to pay for goods and services.
The projections, according to the survey, are forecasting a decrease in credit card use for holiday purchases in excess of 10% for the 2009 holiday shopping season. The survey was conducted by a firm called Bigresearch.
Here’s how some of the numbers play out:
In 2008 31.5% of consumers surveyed said they used credit cards to make their holiday purchases. In contrast, only 28.3% of would-be shoppers said that they would be using credit cards in 2009.
It’s not that they will be buying less per se, but rather will be using cash more to pay for their purchases instead. The study signifies that more and more Americans are living within their means while avoiding credit.
The Effect on Credit Card Issuers
This is about the last thing the banks and financial institutions that issue credit cards wanted to hear. But you can bet that they were not surprised by these numbers. As the recession lingers and unemployment remains high people will make a conscious effort to live within their means and avoid taking on more debt.
Credit card issuers are already being hit with a record high number of defaults. Until the unemployment picture begins to improve that trend will continue. There is a direct correlation between the use of credit and unemployment numbers. Simply stated, when times are good people will actively consume goods and services and when times are bad they will not.
The Effect on Retailers
The picture is not all that rosy for the nation’s retailers either. This holiday season is expected to see weak sales numbers just as we saw last year. People are spending their money on necessities rather than presents and comfort items that are deemed to be unnecessary.
Only time will tell as the final numbers are released just how bad this holiday season will be for credit card issuers and retailers. This much we know, we are all looking for, hoping for I should say, a more prosperous year to come.
Related Information:
- The Early Holiday Sales Forecast No surprise here, the 2009 sales forecast doesn't look good....
- Salvation Army Christmas Kettles Now Accepting Plastic The Salvation Army now accepts credit cards at their red kettles....