Survey: Consumers Enter Holiday Shopping Season Ready to Spend but Unconcerned About Credit Risks
CHICAGO, IL--(Marketwired - Nov 18, 2014) - Nearly eight-in-ten American credit card holders (82 percent) plan to spend at least as much or more on holiday gifts this season compared to last year and nearly as many (80 percent) plan to do that spending on credit cards, according to a new survey released by TransUnion. However, a majority of consumers (60 percent) have little or no concern about how their holiday spending will affect their credit.
"Our survey found that shoppers are not connecting their heavy reliance on credit cards during the holidays to potential impact on their credit worthiness," said Ken Chaplin, senior vice president at TransUnion. "Detrimental effects to your score can be short-lived if holiday balances are paid off each month. It's important to remember that carrying a balance month after month could have a negative effect on your credit standing."
Though many consumers are not familiar with the credit risks of holiday shopping, they are concerned about the cost of the holiday gift giving tradition. More than eight in ten (84 percent) said they are worried about the affordability of their holiday shopping list, and nearly half (48 percent) said they would rely mostly on credit cards to buy gifts. And while consumers are worried about their spending this holiday season, they are not regularly monitoring their credit to understand the impact of spending. In fact, nearly half (45 percent) of consumers said they check their credit reports just once a year or less and only four in 10 subscribe to a credit monitoring program.
"During the holidays and year-round, it's important for consumers to be aware of the impact of spending behaviors on their credit," said Chaplin. "Subscribing to a credit monitoring service and regularly checking their credit report can help consumers be more attuned to the implications of spending on their score."
Establishing a budget, using a tool like TransUnion Plus, before shopping can also help reduce over-spending, yet roughly six in 10 (59 percent) of respondents have yet to establish a budget for gift-giving this year. In addition, more than a third of consumers (35 percent) haven't started saving for the holidays, and a majority of that group (52 percent) reported they would put most of their purchases on credit cards.
To help consumers manage their credit and spending during a season of heavy spending, TransUnion suggests five strategies shoppers can follow to help maintain good credit standing:
- Know your rate and what you owe. Before you start shopping, know the interest rates on your credit cards, as well as what you already owe.
- Monitor your credit reports regularly. Inaccuracies can lower your credit score as well as indicate identity fraud, so watch for anything you know is incorrect or unfamiliar. Consider a credit monitoring service like TransUnion's, which can you track any fluctuations in your score.
- Understand the impact of new accounts. If you're going to open new retail accounts to get a discount on shopping, be aware that this may cause your credit score to suffer a short-term dip.
- Pay Highest Rates First. Pay off balances with the highest interest rates first. Don't pay more in interest than you have to.
- Minimize interest. If you can, pay more than the minimum each month, otherwise, interest will grow on the remainder of your credit card balance. Try to negotiate your interest rate. In this economic climate, card issuers are anxious to retain consumers who use credit responsibly.
For more information about TransUnion's budgeting tool, TransUnion Plus, please visit: https://www.transunionplus.com/.
For more information about Credit Monitoring, please visit: http://www.transunion.com/personal-credit/credit-management/credit-monitoring.page.
About the Survey
The online survey includes responses from 1,007 U.S. consumers between the ages of 18 and 64 that have at least one credit card. The survey was conducted between October 28, 2014 and October 30, 2014.
TransUnion Interactive, Inc. is a consumer subsidiary of TransUnion. As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs associates in more than 33 countries on five continents. www.transunion.com. Follow us on Facebook at http://www.facebook.com/TransUnion.