Are you one of those shoppers who heads out after Thanksgiving dinner to stand in line outside of department stores, making a sport out of getting the best shopping deals? It should come as no surprise to you that each year, credit card balances increase around November, December, and January.
How seasonal shoppers affect the credit card market
Credit card balances tend to fluctuate throughout the year according to seasonal spending habits like Black Friday and Christmas shopping sprees. Some people save their credit cards specifically for end-of-the-year shopping and may instead stick to cash for the other nine months of the year.
With these seasonal shoppers added to the credit card market, the total balance on credit cards increases, but the average balance doesn’t increase. The seasonal shoppers’ balances are likely not as high as the regular credit card users’ balances. Seasonal shoppers aren’t putting all of their everyday purchases on a credit card—it’s probably just their holiday shopping purchases that make up their balances.
The current trends in credit card balances
However, as we’ve talked about before, consumers overall are deleveraging, or paying off debt. Total holiday season balances are lower now than they have been in the past few years. In 2011, credit card balances have been lower than in the last few years, and this year looks to be the bottom. I predict shopping is going to pick back up in the next few years.
I also think we probably won’t see 2011 holiday shopping credit card balances reach the level of 2010 holiday shopping balances, but 2011 overall balances are trending toward last year’s levels. I’ll reserve judgment until the end of the year, but I hope this is a sign the credit card market is bouncing back.
For those of you who do have plans to do a bit of holiday shopping on your credit cards, check out strategies for paying off debt as shared by Mechel Glass from CredAbility.org.
What are your holiday shopping plans? Do you use a credit card for your holiday purchases? Do you pay the balance off right away, or pay it off over time? I try to write out a shopping list and a budget, and stick to it, for my holiday purchases. I’d love to hear your holiday shopping suggestions in the comments.
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