Holiday shoppers are showing a preference for cash this year. It may be due to the credit companies lowering credit limits or in some cases even canceling accounts. The National Retail Federation has reported some shoppers are using cash rather than racking up charges on their plastic. With fluctuating interest rates and years of paying off burdensome debt loads, 72% of all shoppers reported that they are using cash exclusively this year.
To ensure that they use cash only, some shoppers are leaving their cards at home entirely. A ‘cash only’ policy allows consumers to be done with their purchases and minimize their expense, rather than paying them down every month over 3 or 4 years.
Paying cash avoids the high interest fees and interest rates. With interest rates on some cards steadily increasing it’s no wonder why consumers are going back to cold hard cash. Avoiding exorbitant interest rates and monthly payments are driving the use of the cash only policy. Increasingly, in store cards that offer no interest promotional offers for six months or less.
Stick to a Budget
Being able to pay with cash or a debit card helps with budgeting spending. Cash and debit card transactions prevent over spending and impulse buying. Consumers know what their bank balance is and are reluctant to overspend when using cash or debit.
When going shopping with your card, check your credit score before heading out. Then you know what your limit is before paying with the plastic.
Being disciplined on spending habits and to prevent over spending try these tips:
• Make a list – Having a list of items to be purchased and their approximate dollar value will prevent over spending or buying items on impulse.
• Shop early – Not only will this help the stress level it will help purchase items during the sales periods.
• Be careful when using the debit card – The debit card can be easily stolen and PIN numbers stolen.
Cash Alternatives
In addition to cash and debit, consumers are relying more on PayPal and Bill Me Later for online purchases. Merchants are willing to swallow the 1.9 to 2.9% cut to get the business. This is slightly lower than the interchange fees of 2 – 3.5% for credit cards. Forrester Research estimates that on line payment services represent approximately 11% total of on line payments, rather than credit cards.
Gift cards are a great alternative to credit cards and cash. There are some, however, that have associated fees and charges. Some have declining balances over time and often have expiration dates.
Layaways Trendy Again
Layaways are making a comeback. Layaways, let consumers buy items on a month by month payment plan with no interest charge while the store keeps the item for them. With the rise of credit cards the layaway became less popular. The layaway was once considered a tool for the poor but these days its image has changed and the layaway is an acceptable option for payment. Once the item is paid off the item can be picked up.
Layaways are being promoted with storefront posters. Some shops are noticing a dramatic increase in requested layaways. Toy stores and shoe retail outlets are popular locations that offer layaways with the added benefit that purchases are stored at the shop until they are paid off. This convenience is a bonus for harried shoppers looking for safe places to store any gifts.
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