SAN FRANCISCO The appeal of using credit cards this holiday shopping season will be lower as issuers slash credit limits and a growing number of consumers choose to pay for gifts with cash or debit cards.
The number of U.S. shoppers using credit cards this holiday season is expected to decline 10.1 percent this year, making up 28.3 percent of shoppers versus 31.5 percent a year earlier, according to a survey released on Tuesday by the National Retail Federation (NRF) and BIGresearch.
Cash as a payment method is making up the difference, with a quarter of shoppers expecting to use their greenbacks, up 9.1 percent from the 2008 holiday season.
The survey's results point to a strengthening trend in the payments industry, in which consumers have moved away from credit and turned to cash or debit cards in an attempt to better control their finances and spend within their means.
"With many holiday shoppers focused on spending within their limits, it's no surprise that fewer people will be relying on credit cards this year," said Tracy Mullin, chief executive of the NRF, in a statement.
Investors are waiting for signs of a consumer recovery this holiday shopping season after a financial crisis in 2008 yielded the worst retail sales results in decades.
But industry groups are expecting a tepid selling season, with sales forecasts ranging from a slight increase to a slight drop versus a year ago due to rising joblessness, a weak housing market and still-limited access to credit.
The survey found that more consumers planned to purchase clothing and toys this year. Some 58.4 percent of adults are planning a clothing purchase this year from 57.4 percent a year ago, while some 42.2 percent plan to buy toys versus 41.6 percent in 2008.
Fewer shoppers plan to make purchases of electronics and jewelry, according to the survey. Some 54.3 percent of consumers said they planned to buy gift cards, compared with 53.5 percent last year.
The survey, which was conducted from Nov 3 to Nov 10 and has a margin of error of plus or minus 1.0 percent, polled some 8,692 consumers in the United States. (Reporting by Alexandria Sage)