It’s the thought that counts: Americans plan holiday gift thrift
Poll shows more than a third will spend under $50 on their priciest present
Personal finance journalist with an eye for industry news
Expecting a nice holiday gift from a loved one? Forget the smartwatch, and get ready for a new sweater.
A new CreditCards.com survey reveals only 53 percent of consumers will shell out $50 or more for their most-expensive gift this year. Thirty-five percent will spend less than $50 on their priciest present, and 12 percent aren’t buying gifts at all.
Go to "2017 holiday shopping guide"
The results suggest Americans are shunning shiny, expensive items in favor of smaller gifts that are easier on the wallet and more meaningful to the recipient.
“I think it’s encouraging, because although we might usually think that the more expensive the gift, the better it is, that’s often not the case,” said Evan Polman, a marketing professor at the University of Wisconsin who has conducted research on gift giving. “As a recipient, you’re usually just as happy to receive an expensive gift as you are an inexpensive gift. There is some truth to ‘It’s the thought that counts.’”
Expensive holiday gift poll: key findings
Here’s what else our poll found about Americans’ holiday spending plans:
- Men place partners atop their “nice” lists. Thirty-seven percent of men said their most expensive gifts will go to their significant others, compared to 26 percent of women who said the same.
- Women put children first. Women (47 percent) were more likely than men (24 percent) to say they’ll spend the most on their children or grandchildren.
- Online shopping beats fighting the crowds. Thirty-nine percent said they would buy their most expensive gift online, while 36 percent plan to purchase it in a store.
- Young adults and seniors still flock to stores. Consumers age 18-26 and 63 and up prefer buying holiday gifts in stores – all other groups prefer online shopping.
- Big spenders are a small minority. Only 9 percent of consumers will buy a gift that costs $250 or more this year.
The survey of 1,093 adults was conducted online Oct. 19-20, 2017. See survey methodology.
Economy still mixed
Fifty dollars used to be a lot of money. People who grew up in the early-to-mid-20th-century no doubt recall holidays in their youth when a $50 gift was unheard of. Just 30 years ago, $50 had more than double the buying power it has today.
In 2017, you’d be hard-pressed to find a truly tantalizing gift for a significant other or a child for that amount. So, why are many of us limiting our generosity to a price that barely gets you a nice pair of Levi’s jeans or a protective iPhone case from Apple?
Consumers may remain wary of a new economic downturn after years of slow post-recession growth. Michael F. Kay, certified financial planner and president of Financial Life Focus said even a positive economic signal, such as recent stock market growth, can cause worry.
“I think there’s a lot of fear amongst consumers right now,” Kay said. “They’re watching the stock market rise significantly, and they don’t understand why the markets are going up the way they are. When there is uncertainty, people tend to become a little more conservative in letting their dollars go.”
Consumer debt has returned to recession-era levels, with card balances flirting with the $1 trillion level as of August 2017. But there’s little evidence to suggest that consumers are struggling to manage their finances – card delinquencies remain near 15-year lows, according to the American Bankers Association. Part of the reason? While credit card issuers have resumed granting cards to people with subprime credit, those cards tend to have low credit limits. So people with bad credit have little room to go nuts with their cards. A few purchases and they max out.
“If people are feeling maxed out or like they’re struggling to pay their bills, they’re going to be less likely to add to the stress,” Kay said. “The good news is that motivates people to make important shifts in their thinking and their spending. Sometimes it takes stress and problems to get people to re-focus on what’s really valuable and important in their lives.”
Are we just shopping smarter?
Not all consumers are hobbled by low credit limits. Many are likely just trying to save as much as they can to avoid ringing in the new year under an avalanche of debt.
Leah Ingram, author of “The Complete Guide to Paying for College,” said shoppers may be spending less on presents this year because they scouted out great deals long before holiday season. (Black Friday in November is no longer the only blockbuster shopping day on the calendar.) Or, they’ve accumulated enough credit card rewards throughout the year to cover their gift purchases.
“This is what my husband and I do with our millennial children,” Ingram said. “They love getting gift cards, so we always use our points from our Discover or Visa cards to get those free gift cards to the retailers or services they love and use.”
The growing popularity of online shopping may also explain consumers’ cost cutting. Our survey found that 39 percent of respondents plan to buy their most expensive gift online, compared to 36 percent who intend to buy it in a store. Shoppers now can find myriad ways to save while buying online, from deals advertised by digital giants such as Amazon to discounts on bundled items and services sold via sites such as Groupon.
“I absolutely believe that online coupons and digital-only deals drive more people to shop online,” Ingram said. “I know that I won’t hit ‘buy now’ unless I’ve scoured the internet for coupon codes or ways for me to save even more on my purchase.”
‘Oh ... a label maker. Thanks!’
Less than 10 percent of our survey’s respondents said they would buy a gift that costs $250 or more this year. A fortunate few are destined to unwrap designer clothes, jewelry, video game consoles and the iPhone X. But will they be any happier or show more appreciation to their gift-givers than those who receive more modest offerings?
Polman of the University of Wisconsin said people tend to show the same level of gratitude for most gifts they receive, no matter the perceived value or cost. After all, few of us react to a pair of ugly socks by berating the giver or tossing the socks on a nearby yule log.
“When you’re receiving a gift, there’s an impression you have to manage,” he said. “Unless you’re just sort of spoiled and ungrateful, you’re going to behave as if you like every gift.”
Many of us do like small gifts that hold meaning, even if they lack bells and whistles or a brand name with cachet. A shiny, new tech gadget such as a smartphone has little sentimental value, and chances are it will be obsolete within a few years. Meanwhile, there are plenty of customizable, low-cost items on sites such as Etsy and Bonanza that can be endearing and enduring to a loved one.
“A personal touch is almost always better than an expensive gift just because you can get used to using an expensive gift,” Polman said. “But when it comes to thoughtful gifts, those create memories. You’ll occasionally recall the gift and it will feel good. No one feels good when they recall their iPhone after they’ve had it for a couple of weeks.”
Celebrate the holidays in the green, not the red
Our current mood of thrifty gifting may worry you if you’re hoping for something flashy to flaunt when you return to work or school after the holidays. But it’s good news for consumers, who are finding ways to make the people they care about happy without overspending.
Those who succeed can scratch “get out of debt” off their list of New Year’s resolutions.
CreditCards.com commissioned YouGov Plc to conduct interviews with 1,093 adults living in the United States. The survey was conducted online between Oct. 19-20, 2017. Statistical results are weighted to correct known demographic discrepancies.
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