As the holiday shopping season gears up for peak spending, WalletHub released several reports today including a consumer survey showing that “35 million Americans still have credit card debt from last holiday season” and that “nearly one-third of consumers will spend less on holiday this year than last year.”
The personal finance web site noted that as shoppers ready themselves to dole out $1.1 trillion this holiday season, they are saddled with “near-record” credit card debt. The reports included ways consumers “can save money and avoid a financial hangover in the new year.”
This year, WalletHub said the top credit cards programs for holiday shopping were the Capital One Savor Cash Rewards, for its “best initial bonus” and Citi Double Cash, for its “best flat-rate cash rewards” as well as American Express’ Blue Cash Preferred for “best ongoing bonus rewards.” In the gift card report, Target, Walmart, Sephora, eBay and Ikea were ranked the best for consumers using the site’s proprietary methodology.
Regarding the number of consumers holding credit card debt from last year, Odysseas Papadimitriou, chief executive officer of WalletHub, described it as “worrisome.”
“That indicates people are just treading water financially and have been unable to use the past 12 months to prepare for the next recession, the arrival of which is just a matter of time,” Papadimitriou said. “The fact that nearly one-third of consumers plan on spending less this holiday season than they did last year could be either good or bad news. It depends on whether people are recognizing the need to cut back and save before it’s too late or simply beginning to falter financially.”
When asked if it made sense for consumers to get a new credit card just for the holiday season, Papadimitriou said there might be opportunities to consider.
“Many people are rightfully hesitant to apply for new credit cards too often, but you definitely don’t want to let valuable savings opportunities pass you by, either,” Papadimitriou explained. “For example, credit card rewards bonuses are near record highs right now, and the winter holiday season may be the only time each year that you spend up to $3,000 within a three-month period, which is required to earn many of the best bonuses.”
Papadimitriou said if shoppers plan to spend a lot anyway, “an upgrade in rewards cards could save you hundreds of dollars. And if you’re not going to need the best possible credit score in the next six months, the temporary dip that occurs when you open a new account shouldn’t cost you. Just make sure to use the new account responsibly and not as an excuse to rack up debt.”