LUBBOCK, TX (KCBD) - The holiday shopping season is upon us, but more people are cutting back and choosing cash over credit. Consumer advocates say it's time to evaluate your finances before hitting the stores.
No matter where you shop this season, folks have to face some tough decisions. According to Consumer Reports, about 13.5-million Americans still have debt from last year's holiday season.
In a recent poll, the National Foundation For Credit Counseling (NFCC) asked folks how they'll pay for gifts this year. More than 3,800 people responded, and 68% of those planned to use cash.
LowCards.com, a credit card information web site, says studies show folks spend 12% to 18% less when they use cash. "It's a lot harder to part with good old cash. I mean to actually physically take the cash out of your wallet or purse, count it out, give it over is a lot more painful, shall we say, then using a credit card and not thinking about, gosh, my money is actually going toward the purchase of this item," Bill Hardekopf with LowCards.com said.
Many people have not saved any money in advance, though. That could lead folks to slip back into charging their purchases.
Here's why that could create a problem. "If you spend $1,000 on your credit card and let's say you have a 15% APR and just spend $25 a month on paying off that credit card, it will actually take you until May of 2014 to pay off this Christmas," Hardekopf said. At that rate you'd would also pay an additional $370 in interest. That's why consumers are urged to shop wisely.
The Consumer Credit Counseling Service of Greater Dallas has these tips to keep your finances in check:
- create a detailed budget
- don't wait until the last minute to shop; many stores have early holiday promotions
- use coupons for extra savings
- don't charge anything you can't pay-off in three months
- consider giving a service as a gift; for example babysitting or house cleaning
The NFCC suggests that consumers take the following Holiday Spending Quiz to assess their current financial stability before they begin shopping: (answer true or false)
* There are arguments in my home about money.
* I sometimes hide my purchases.
* I have thought about filing for bankruptcy.
* I struggle to make my mortgage payment.
* I sometimes pay my bills late.
* I have used more than 30 percent of my available credit lines.
* My debt interferes with my sleep, job or home life.
* I have little or no savings.
* I am receiving collection calls or notices.
* If I lost my job, it would mean an immediate financial crisis in my life.
The harsh reality is that consumers who answer "True" to two or more of the above are not candidates for a holiday shopping spree.
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