Thrifty Thinking: Inflation and the Holidays

 With the holiday season right around the corner and consumers struggling with inflation, the personal-finance website WalletHub today released the following reports to help holiday shoppers save money and avoid a financial hangover in the new year.

• Holiday Shopping Survey
   
  • Skipping Presents: More than 1 in 3 Americans are foregoing gifts this year due to inflation.
     
  • Lingering Holiday Debt: Nearly 1 in 4 Americans still have holiday debt from last year.
     
  • New Credit Card: Nearly 1 in 5 people will apply for a new credit card to help with holiday shopping.
     
  • Inflation Impacting Charity: Nearly half of Americans say their charitable giving is affected by inflation.
     
  • Reduced Holiday Spending: 28% of people will spend less than last year on their holiday shopping.
     
  • Social Media Influence: 23% of Americans are planning to make a holiday purchase based on social media.

• Best Credit Cards for Holiday Shopping: Wells Fargo Active Cash is the best card because it offers 2% cash back on all purchases, a 0% introductory APR for 15 months, and a $0 annual fee.
   
• Credit Card Price Protection Report: With price protection, cardholders can get a refund if the price of a recently purchased item drops soon after the holidays. Many cards used to offer this benefit, but that’s not the case anymore.
   
• Credit Card Purchase Protection Report: This benefit can help repair or replace recently purchased items that are damaged or stolen. Several major credit card companies still offer this benefit.

“Consumers have been through a lot since last year’s holiday season, including 12 months of high inflation and a handful of Federal Reserve rate hikes that pushed credit card interest rates into record territory, so it’s understandable that many household budgets don’t have room for holiday gifts this year. Almost 1 in 4 people aren’t even done paying off holiday debt from last year.”
                                     
                                    - John Kiernan, WalletHub Editor
 

Credit Cards Offer Holiday Savings To Help Fight Inflation & Record Rates

More than 1 in 3 Americans are skipping holiday gifts altogether this holiday season due to inflation, according to a new survey from the personal-finance website WalletHub. The site’s 2023 Holiday Shopping Survey also found that 28% of people expect to spend less this year than they did last year.
 
“Consumers have been through a lot since last year’s holiday season, including 12 months of high inflation and a handful of Federal Reserve rate hikes that pushed credit card interest rates into record territory, so it’s understandable that many household budgets don’t have room for holiday gifts this year. Almost 1 in 4 people aren’t even done paying off holiday debt from last year,” said John Kiernan, WalletHub editor. “Higher prices are putting lumps of coal in charities’ stockings, too, as about half of Americans say inflation is affecting their charitable giving this year.”
 
Fortunately, economic forces channeling the Grinch and Ebenezer Scrooge don’t have to rob the season of its holiday cheer. There are plenty of free or very inexpensive gift options to at least keep the kids happy, and the right credit card approach could free up hundreds of dollars in your end-of-year budget. In addition to providing rewards and low introductory interest rates, credit cards can help holiday shoppers get price-matching and insurance benefits for big purchases.
 
Best Credit Cards for Holiday Shoppers 

• Overall: Wells Fargo Active Cash
• Store Card: Kohl's Credit Card
• Online Shopping: Amazon Prime Visa

“Almost 1 in 5 people plan to apply for a new credit card to help with holiday shopping this year, and the savings you can get from the best cards right now could change the whole tenor of the holidays,” Kiernan said. “We compared more than 1,500 credit card offers to select the best cards, and there are savings opportunities available to pretty much everyone.” 
 
Tips to Help Make Holiday Shopping More Affordable

• Comparison-shop for the best prices. Most holiday gifts can be purchased from multiple places. If you see something you like available from one retailer, do a search to see if anyone else sells it for less.
   
• Research deals you see on social media. WalletHub’s survey found that 23% of Americans are planning to make a holiday purchase based on social media. To avoid scams, inflated prices and low-quality materials, make sure you read reviews and check out other sellers before providing your payment information.
   
• Save with one of the best credit cards for holiday shopping. The top cards can easily save you $300+ on holiday purchases. 
   
• Use a credit card with price protection to avoid missing out on sales. With price protection, you can get a refund if the price drops after you buy something.
   
• Skip optional insurance if you have purchase protection. This credit card perk covers the cost of repairing or replacing a recently purchased item that gets damaged or stolen.
   
• Be careful with retailer financing offers. Most 0% financing deals that specific retailers will offer you have a so-called deferred interest clause, which means not paying off your full balance by the end of the promotional financing period will result in interest charges retroactively being assessed from the purchase date at the card’s regular APR. That could lead to a very costly surprise if you’re not careful. 
   
• Invest time and energy, rather than money. A gift doesn’t have to cost a lot to mean a lot. For example, taking on some extra household tasks so your partner can have a day of relaxation could go a long way. Similarly, clearing your schedule for some quality time with your kids could be priceless. It doesn’t even really matter what you do.

“You don’t have to choose between a joy-less holiday season and a lot of costly debt,” Kiernan said. “Family time, a little creativity, and a little help from the right payment method can go a long way toward making the holidays merry without overspending.”