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The holidays are just around the corner, and this season is gearing up to be much different from any other in recent memory. With the number of COVID-19 cases spiking to new highs in many regions, many families will be spending time apart, and others will be changing how they approach holiday spending.
While the pandemic has taken an economic toll, Americans still plan to spend this upcoming holiday—just a little differently than they have in the past. In 2020, consumers plan to use more credit cards than cash, and some even plan to open a credit account just for holiday spending, according to a recent Experian survey.
Experian surveyed 1,000 consumers to see how they felt coming into the holiday season and how they were planning to spend. Read on to find out what they revealed about their 2020 holiday spending plans.
Consumers in 2020 Tend to Use Credit Cards, Not Cash
With more than 1 in 3 consumers stressed about staying within budget, many are open to using credit cards over cash this year. Over half of those surveyed—57%—said they tend to use credit cards instead of cash when holiday spending. That's an increase of 8 percentage points from the same time last year.
As part of their planning, 55% of consumers say they will put money aside for gifts as they approach the holidays. That figure is down from 65% who said the same in 2019.
Another 43% of Americans plan to tighten their budget ahead of the holidays. That's another reduction compared with last year, when 52% of consumers planned to clamp down their budget ahead of holiday shopping.
These changes may point to the fact that some consumers have had their incomes slashed due to the pandemic, or have already made cutbacks to the point that more may be impractical.
1 in 4 Plan to Apply for New Credit Ahead of the Holidays
In addition to more consumers saying they'll use credit cards over cash for holiday purchasing, some 28% of those asked say they plan to open a new credit card ahead of the holidays. Of that group, 45% say they are facing credit or financial barriers due to COVID-19.
Among the others planning to open a new credit card this holiday season, some were looking to take advantage of introductory 0% annual percentage rate (APR) credit card offers or travel reward earnings possibilities. A total of 32% said they wanted to apply for a 0% intro APR card, while 31% wanted to open a card for the travel rewards.
Consumers Feel Less Holiday Shopping Stress This Year
Though the pandemic may pose financial strain for many consumers, the winter months are a time when many celebrate what they are thankful for. Given the turbulence of the past year, and the toll physical separation has taken, the general sentiment around the upcoming shopping season appears to be less negative.
When asked to choose any emotions they've been feeling, fewer said they felt stressed, overwhelmed, panicked and anxious compared with last year's survey. The largest reduction (13 percentage points) occurred among consumers who said they felt stressed when thinking about holiday shopping.
According to the Experian survey, a larger proportion also said they are feeling more grateful in 2020. Compared with 2019—when 27% of Americans said they felt grateful when thinking about holiday shopping—30% report feeling this way in 2020.
One-Third of Americans Stressed About Staying Within Their Budget
Despite changes in sentiment, the larger economic strain hasn't escaped consumers gearing up for holiday spending. Over half of Americans—52%—said that COVID-19 has caused credit or financial barriers that have prevented them from doing holiday shopping the way they planned, according to Experian's survey.
When asked to describe what makes holiday shopping stressful, respondents mostly replied with financial concerns. Over one-third—35%—said it's hard to stay within their budget while holiday shopping. Another 28% said they didn't want to add to their existing debt. More than a quarter—27%—said they didn't have the extra money to buy gifts, and 12% said they couldn't access credit in order to purchase presents. The remaining respondents cited other reasons.
Consider Checking Credit Scores Ahead of Credit Applications
For anyone contemplating applying for new credit ahead of the holidays, there are a few important things to consider. First, try to get a card that offers some sort of benefit—like 0% intro APR on new purchases or an introductory bonus offer after meeting a minimum spend. These offers can be extremely valuable and can help you save money on your holiday shopping.
Second, make sure your credit is in good shape before applying for your new card. Consider getting a free copy of your credit reports and scores from Experian prior to sending in any new applications. Knowing where your credit stands will give you an idea of what cards you might be approved for.
To get credit card offers you are likely to be approved for, check out Experian CreditMatch™, which uses your FICO® Score☉ to pair you with the offers.