Spending may be better than expected
By Marcy Gordon
WASHINGTON The battered economy and terrorist events of the past two months have led consumers to trim their holiday spending plans, but not as much as some experts expected, a new survey shows.
Tips for consumers to avoid spending too much for the holidays:
Budget your spending. Start with a realistic idea of how much you can spend on holiday gifts, food, travel and other items. Tally it up and think hard about whether you can afford to spend that much. If the total figure makes you uneasy, think about areas in which you might cut back. Then stick to your budget.
Make a list. Work from a list when you shop to avoid impulse purchases that could leave you mired in debt at the end of the holiday season.
Comparison-shop. Fight the urge to get your shopping over with as quickly as possible and take some extra time to find the best deal.
Reduce your interest payments. Now is a good time to look for lower interest rates on credit cards, because rates on some cards have declined more than others. Pay off account balances for holiday purchases as quickly as possible.
Sources: Consumer Federation of America, Credit Union National Association
That compares with 56 percent of consumers last year. Of those polled, 28 percent plan to spend less this holiday season than last year, up from 24 percent in the 2000 survey.
"These results suggest that the contraction in holiday spending may not be as pronounced as we might have expected," said Bill Hampel, chief economist for the credit union group.
Furthermore, the survey showed a decline in the number of consumers worried about paying off their current and future debts.
A growing number of Americans are paying off or managing their debts effectively, said Stephen Brobeck, the consumer group's executive director.
In the survey, 38 percent of consumers said they are carrying credit card debt, down from 42 percent last year.
U.S. household credit card debt is about $600 billion; the average interest rate on credit card accounts is currently around 14.6 percent.
Declining interest rates also appear to be a factor in easing consumers' concern about debt, Brobeck said.
The economy shrank at a rate of 0.4 percent in the July-September quarter and economists are forecasting an even bigger drop in the current October-December quarter. Unemployment has soared to 5.4 percent, while consumer confidence is at a 7 1/2-year low.
To revive the economy, the Federal Reserve has cut interest rates 10 times this year, with three reductions coming after the Sept. 11 attacks.
Economists fear that consumers could remain tightfisted, further weakening the economy.
The survey of 1,019 adult consumers was conducted Oct. 25 through Oct. 28. It has a margin of error of plus or minus 3 percentage points.