Paying for the holidays

As we approach the holiday season this year, spending habits and attitudes will no doubt be affected by the current instability of our nation’s economy. Nine months ago, on SupermarketGuru.com, following the wrapping up of the 2007 holiday season, we ran a quick poll to see how shoppers felt about their spending habits after the decorations were taken down, the relatives went home, and the bills came in with the new year. This month we ran the same quick poll to check in and see how shoppers’ attitudes may have changed as they go for another go around of holiday spending.

As we approach the holiday season this year, spending habits and attitudes will no doubt be affected by the current instability of our nation’s economy. Nine months ago, on SupermarketGuru.com, following the wrapping up of the 2007 holiday season, we ran a quick poll to see how shoppers felt about their spending habits after the decorations were taken down, the relatives went home, and the bills came in with the new year. This month we ran the same quick poll to check in and see how shoppers’ attitudes may have changed as they go for another go around of holiday spending.

The number of credit cards respondents carry didn’t seem to change at all, with exactly the same number one answer being 0-3 (59% for both January and October), and the second answer being 4-7 with 36% in January, and dropping down a little to 30% in October. When it comes to paying for every day purchases, there were slight changes with 55% in January saying they use “bank debit cards”, and then falling to 41% in October. Credit cards went up by four percent from 24% in January to 28% in October. And the use of “cash” went from 16% in January to 23% in October. When paying for gifts and unbudgeted items, respondents showed a rise in credit card usage going from 55% (Jan) t o 63% (Oct), while “bank debit cards” went fell from 28% (Jan) to 18% (Oct).  Cash usage went up from nine percent (Jan) to 12% (Oct).

So, why the increase in credit card usage? It appears that rewards and points-based programs seem to be the attraction. When asked what the most important reason for choosing a credit card to pay for certain items, 49% in January said for “I can participate in a rewards program (points, cash back, etc)”, and in October that number grew by ten percent. This is even more explained in the question that followed, “When paying for a purchase, how do you choose the one credit card to use?” In January, the top answer was “the one with the lowest interest rate” (39%), and coming in second was “the one with the best rewards” (30%). October results show a little change with the 38% now saying “the one with the best rewards”, and 27% saying “the one with the lowest interest rate”. To further explore, we asked “What types of rewards or incentives most motivate you to use a credit card?” Here the answers hardly change with January and October’s results showing 40% choosing “cash back”, and 17% choosing “points”.

While January respondents were just recovering from the 2007 holiday season, 49% predicted that they would spend less in 2008 than 2007. However, as of October, as shoppers prepare to pull out their wallets again, good news for retailers, that number has gone down to 38%.

With respect to gift card purchasing, the results reflect an attitude that gift cards may be more popular for “special occasions/birthdays” with an increase from 38% in January to 50% in October. And it also appears that more people prefer to purchase their gift cards from a “specific retailer”, that number increasing from 38% (Jan) to 46% (Oct).