As many consumers remain unemployed and are filing for bankruptcy at record rates, finding the extra cash for holiday shopping could prove difficult.
As we mentioned previously, fewer consumers will be turning to credit cards to purchase their holiday gifts this year. Financial experts say this trend will result in less spending overall, as consumers tend to spend less when they use cash than they would if they use credit. The good news is that many retailers are attempting to offset this revenue by offering sales and promotions. 
However, how will the move away from spending affect our fragile economy? Without a doubt, the decreased spending will slow economic recovery. Still, while these responsible financial habits may thwart economic recovery in the short-term, economists say the “spend less, save more” mentality will benefit the economy in the long run. For example, consumers who save often have more money to spend in retirement. This can be a good situation for both the consumer and the economy.
Still, the financial security of the future seems quite far off for some struggling families. Many will become overwhelmed with the costs associated with the holidays, including food, decorations, gifts and travel. A director of an organization which provides debt and foreclosure counseling urges these individuals to be honest about their situations. She recommends telling family and friends there is a budget for the holidays, saying most people understand the holiday season is not about money and material possessions.
Source: The Salt Lake Tribune “Retailers brace for shopping shift away from credit cards,” Lesley Mitchell, 20 November 2010
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