It’s a given that Americans will spend outside of their typical budget during the holiday season. In fact, consumers plan to spend $997.73 on gifts, holiday items and other non-gift purchases for themselves and their families this year, according to the National Retail Federation.1 Luckily, there are some things that consumers can do to lessen the financial blow.
Signing up for retail newsletters to receive a discount on products isn’t necessarily a bad idea to start, but if continuing to receive emails from your favorite brands is causing you to spend more than you typically would, it might be time to reconsider your strategy. Nearly one in five merchants send between five and eight bulk emails per month to consumers, or between one and two per week.2 This can really add up if you’ve signed up for emails from multiple stores. That constant stream of advertising can wreak havoc on your wallet, so consider unsubscribing from store emails as they show up in your inbox to avoid unnecessary spending.
If you’ve saved your credit card information with online stores — or in the online cache of your web browsers — you’re not alone. A recent online survey found that 56 percent of U.S. adults save their credit or debit card information on retailer or service websites.3 Doing so makes online shopping a breeze, but it also makes it easier to spend. Research also shows that, in general, people tend to spend more when they use a card as payment as opposed to cash.4 Make it a little more difficult to make automatic purchases online by removing your information. You never know — in the one minute it takes to walk to grab your wallet, you might rethink your order. As a bonus, removing your information online is one less way for your personal data to get stolen.
Store credit card offers are often appealing since they tend to come with discounts on products when you first apply. After that, though, there’s not much else that’s good about them. For example, the average store-only retail card comes with an APR of 25.77 percent, compared to an average APR of 19.92 percent for non-retail cards.5 If signing up for a store card will really save you a lot of up-front cash on holiday purchases, use the card for your original purchase, pay it off in full when the balance is due, and then cut up the card to avoid using it — and running up debt — in the future.
Let’s be honest — shopping for our loved ones often translates into doing a little extra shopping for ourselves, as well. Sure, that discounted sweater seems appealing now — and it’s convenient to add it to your online cart — but do you really need it? While 58 percent of shoppers say that they plan to spend an average $120 or more on clothing or apparel this year, avoid becoming a statistic by taking a deep dive on the state of your closet before you even start shopping.6 Getting a feel for what you already own — and therefore don’t need more of — might make you less likely to buy things just because they are on sale.
Not everyone has the same budget to work with when it comes to holiday spending, but that doesn’t mean that you can’t be open and honest about setting a financial goal that works for you. One survey found that people who created a holiday budget were less likely to spend more money.7 Have a conversation now with the people on your gift list, so everyone is on the same page in terms of financial expectations. This also provides you with an excellent opportunity to discuss if something else — like doing a group potluck with friends or volunteering together somewhere — might be more enjoyable than swapping actual gifts.
The holidays are a great excuse to show your loved ones how much you care, but that doesn’t have to translate into overspending. Using some of the tips above can help you set realistic expectations for the season and avoid frivolous spending.
1. National Retail Federation. Holiday Spending Reflects Continued Consumer Demand. October 21, 2021. https://nrf.com/media-center/press-releases/holiday-spending-reflects-continued-consumer-demand
2. SmartrMail. Email Marketing Frequency Best Practices in 2020. June 27, 2019 https://www.smartrmail.com/blog/email-marketing-frequency-best-practices-2019/
3. Bankrate. Survey: Despite safety concerns, 64% of U.S. cardholders save their information online. October 24, 2019. https://www.bankrate.com/finance/credit-cards/online-shopping-survey-2019/
4. Fortune. Why You Shouldn’t Save Your Debit or Credit Card Numbers on Store Websites or Apps. October 25, 2019. https://fortune.com/2019/10/25/store-credit-card-number-bankrate-survey/
5. Creditcards.com. Poll: Most retail store card applications happen at checkout. October 12, 2021. https://www.creditcards.com/credit-card-news/retail-store-credit-card-survey/
6. RetailMeNot. Holiday Shopping By the Numbers: Trends for the 2021 Season. September 12, 2021. https://www.retailmenot.com/blog/holiday-shopping-survey-data-2021.html
7. The Ascent. Survey: Americans With a Holiday Budget Spend Less on Average. December 14, 2019. https://www.fool.com/the-ascent/credit-cards/articles/survey-americans-holiday-budget-spend-less-average/