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Holiday Credit Card Debt: Consumers Curb Their Spending

by Barbara Marquand

As the economy struggles to emerge from a deep recession, a growing number of consumers are planning to ring in the new year free of holiday credit card debt.

Just 21 percent of consumers expect to have credit card debt after January 2010 from the 2009 holiday season, down from 26 percent of consumers who carried holiday credit card debt past January 2009, according to a recently released survey by Experian's LowerMyBills.com.

Higher Credit Card Rates Make Impact

More than half of those surveyed--55 percent--said the recession had prompted them to avoid taking on more credit card debt. Of those consumers, 69 percent said higher credit card rates also played a role, and 38 percent said the proliferation of information about the impact of credit card debt had contributed to their curb on spending.

In addition, Experian says those who still plan to carry debt after January 2010 indicate they will pay it off faster. Of consumers who will carry holiday credit card debt, 24 percent say they will pay it off in one to two months. Among consumers who carried holiday credit card debt after January 2009, 18 percent paid it off in one to two months.

New Credit Card Terms Tighten Consumer Spending

Tightened credit is also affecting consumers' holiday spending. America's Research Group, a consumer polling firm, estimates retailers could lose $9 billion in sales this holiday season because of lower credit limits and tougher credit card terms.

In a recent survey of credit card users by comScore, 55 percent of respondents said new credit card terms, such as higher interest rates, had sparked them to decrease their credit card spending.

If you want to keep your credit card debt under control, follow the lead of consumers surveyed by Experian's LowerMyBills.com:

• Set a Credit Card Spending Budget

Of those who planned to carry over no holiday debt, 66 percent said they were sticking to a budget.

• Save Before Using Credit Cards

Forty-two percent of consumers who plan to stay debt free said they saved money before the holiday season.

• Cut Non-Holiday Expenses

Twenty-six percent of consumers indicated they reduced spending in other areas to afford spending during the holidays.


Published 11/22/10 (Modified 01/21/13)

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