Holiday shoppers picking cash over credit: survey

LOS ANGELES (Reuters) - Fewer U.S. shoppers plan to use credit cards to buy gifts this holiday season and the majority of them have yet to complete their gift buying, according to a new survey from the world's largest retail trade association.

Retailers are bracing for their worst holiday season in about three decades as consumers grapple with falling home prices, rising unemployment, harder-to-get credit and higher costs for necessities like food.

After years of using credit cards and home equity loans to support their lifestyles, holiday shoppers this year plan to use a greater proportion of cash to pay for gift purchases.

According to the National Retail Federation's 2008 Holiday Consumer Intentions and Actions Survey, 41.5 percent of shoppers will use debit and check cards -- which are essentially cash -- to pay for holiday items this year, compared with 40.1 percent last year.

The number of Americans planning to pay with cash is also up slightly this year to 22.8 percent from 22.1 percent a year ago. People intending to use credit cards as a primary payment method dipped slightly to 31.5 percent this year, versus 32.3 percent last year.

Nearly three-quarters of shoppers said they had completed less than 10 percent of their holiday gift buying, while just 2.2 percent of shoppers said they were finished.

"Americans may be hesitant to purchase expensive gifts this holiday season, but personal and practical gifts will resonate most with shoppers this year," NRF President and CEO Tracy Mullin said in a statement.

According to the survey, which was conducted by BIGresearch and polled 8,758 people November 5-11, consumers plan to shop in similar gift categories as last year.

Gifts like clothing, music and books top the list this year as 57.4 percent of respondents said they planned to buy clothing and accessories, while 55.6 percent said they intended to purchase books, CDs, DVDs and video games.

Other popular gifts will include new video game systems, Blu-ray DVD players and other electronic items (30 percent), toys (41.6 percent), gift cards/gift certificates (53.5 percent), personal care or beauty items (20.8 percent) and jewelry (19.3 percent).

Retailers from discounter Wal-Mart Stores Inc to high-end department store Nordstrom Inc are cutting prices to lure shoppers, who have been stunned by weeks of bad economic news and significant losses in stock-based savings.

"Though many companies have already been featuring substantial sales and discounts, retailers may still have a few tricks up their sleeves to attract and entice holiday shoppers," Mullin said.

Some of those holiday deals may be too good for consumers to resist, said Phil Rist, executive vice president of strategic initiatives at BIGresearch.

"Even though consumers will be watchful of their spending this year, shoppers may find the bargains too good to pass up and will treat themselves to something they've had their eye on for months," Rist said.

(Editing by Tim Dobbyn)