According to a recent Holiday Spending Survey of more than 3,000 myFICO® customers, folks continue to be most concerned about their credit card debt – almost 40% – as 2011 looms, which was about the same percentage that shared such concerns last year when polled by myFICO®.
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Along with this 40% of worriers is the additional almost 30% who, while still concerned about credit card debt, are now even more concerned about their ability to finance large purchases, such as a home, school, or a car in the coming year. Taken together, almost 70% of respondents are worried about their financial future. Not good news, but understandable.
So, how did those surveyed plan to spend this holiday season? Some of what we learned was:
Almost half expect to charge an average of $100-$500 more than usual during the Holidays
75% say they'll be changing some holiday traditions this season due to the economy, such as gift giving and travel plans
58% don't prepare for holiday spending, but know they'll be spending more than usual
While 35% of respondents plan to use debit cards and 15% will use cash – great ways to stay out of debt – some other positive signs emerged that reflect an increasing awareness of the importance of responsible credit management. Among the other 50% who plan to whip out that plastic this season:
75% of those charging plan to pay their balances in full by the end of the month
More than 75% of those charging expect to keep their credit card balances at less than 30% of their credit limits
80% say they won't open new retail cards this season – with almost half stating the reason as not wanting to "ruin my credit by opening unnecessary cards"
What's it all mean? For me, it's good to see that folks are acting on their legitimate financial worries by adopting sound credit management practices, like minimizing their charging, keeping their credit utilization low when they do charge, and refraining from opening new retail cards. That's good news!
Author: Barry Paperno serves as community manager for the myFICO® Forums and consumer operations manager for FICO®, where he has advised consumers and businesses on FICO® credit scoring since 1995.
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