The holidays are almost upon us, and many have decided they will shop online. Find out why, along with other holiday shopping plan insights.
Holiday shopping can be so stressful: The crowds, the spending and the myriad choices can be downright overwhelming.
It’s no wonder 62% of people surveyed in CreditCards.com’s latest poll said they planned on making their purchases online. That figure, which represents more than three out of five shoppers, is down from 71% in 2020 but up from 51% in 2019.
The most common reasons for shopping online include convenience (70% of shoppers who plan on making most of their purchases online), avoiding lines and crowds (62%), getting better deals and prices online (46%) and fear of COVID-19 (45%).
Generational differences were few among those who will mostly shop online: baby boomers (65%), Gen Zers (63%), millennials (61%) and Gen Xers (58%) were all pretty much on the same page.
More than half of shoppers (51%) plan to start their shopping before Halloween in 2021 – that breaks down to 13% who said they would start as early as August, 27% who said they’d start before the end of September and 25% who said they’d begin in October. The largest segment of early shoppers is comprised of those who have children under 18. Another 35% responded that they would start shopping in November and 13% said December.
Ted Rossman, senior industry analyst for CreditCards.com, thinks this will be a strong holiday shopping season for retailers despite consumers’ “entirely rational worries about COVID-19 and inflation.”
“Most Americans have boosted their savings and paid down debt over the past year and a half, and there’s still a lot of pent-up demand and a desire for a happy, traditional holiday season,” he said.
Rossman also suggested starting your holiday shopping early so you can have more time to comparison shop and spread out the impact of your purchases – and get some cushion room in case there are shipping delays or other supply chain disruptions.
Here are some other major results from our holiday shopping poll:
- In-person shoppers like to see and touch. Of the 38% of shoppers who said they will make in-person purchases, the most common reason was being able to touch and see merchandise (67%), followed by immediate access to purchases (45%) and then supporting local businesses (44%).
- Most will pay with debit cards. A large percentage of shoppers (42%) plan to buy most of their gifts with a debit card. Fewer said they’ll use credit cards (38%), cash (15%) and “buy now pay later services,” such as Affirm, Afterpay and Klarna (5%).
- Income affects payment methods. Those shoppers in the highest income bracket ($80,000-plus per year) plan to use credit cards the most (50%), followed by 41% of middle-income households ($40,000-$79,999) and 25% of lower-income households (less than $40,000). Almost half of lower income shoppers prefer using debit cards, while 42% of middle-income and 35% of higher-income shoppers said they planned on using them. The percentage of shoppers who said they would use cash dropped as income rose (from 21% of lower-income holiday shoppers to 13% of middle-income and 10% of higher-income). Regarding those who plan to use buy now pay later services for most of their shopping, Gen Zers and millennials lead the way (9% and 8%, respectively), followed by Gen Xers (4%) and boomers (1%).
The survey of 2,410 adults, of whom 1,810 qualified as holiday shoppers, was conducted online between Aug. 18-20, 2021. See survey methodology.
The popularity of debit cards is concerning
Andrew Latham is a certified personal finance counselor at SuperMoney, a platform dedicated to helping Americans achieve their personal finance goals.
He pointed out these holiday shopping survey results track well with Federal Reserve Bank of San Francisco’s 2020 Findings from the Diary of Consumer Payment Choice, which also showed our love for debit cards is not going anywhere. The findings showed that “approximately 42% of participants prefer to pay with debit cards, followed by credit cards at 29%.”
CreditCards.com’s survey also shows debit cards as the preferred method of payment for all income levels except the highest earners, and even then it’s not by a huge margin.
“It’s interesting to see how debit cards are more popular than credit cards across the board, even though the average credit score of Americans is 716 has never been higher and credit cards provide more rewards and protections than debit cards,” Latham said.
Latham noted that debit cards provide many of the benefits of credit cards but lower the risk of falling into debt and getting stuck with high interest rates.
While using debit cards instead of credit can help curb impulse purchases during the holiday season, you miss out on superior fraud and consumer protections you get when paying with a credit card, Latham pointed out.
And the holidays are attractive to identity thieves because people tend to make more purchases and are more distracted than at other times of the year. So, the popularity of debit cards, which provide less protection from identity theft than credit cards, is a little concerning.
The shift to online shopping has increased demand for prepaid cards
Trent Sorbe, founder and president of Central Payments, felt that the reason 48% of lower-income respondents plan to use debit cards is because they are particularly popular among financially underserved consumers who historically have relied on cash. He also said that some who answered they planned to use debit cards might have meant prepaid cards.
“The shift to online purchasing has significantly increased demand for prepaid cards, as they provide a means of making online purchases and ensure underserved consumers have access to online merchants,” he said.
See related: How to save money on holiday shopping
Let’s face it: Emotions run high during holiday shopping and it’s easy to overspend. But you can avoid doing that if you set a budget and stick to it. Other ways to prevent it include tracking price changes for expensive purchases and using online coupons, using your credit card rewards to buy gifts, limiting self-spending and setting up a gift exchange instead of giving everyone a present.
That said, if you know you’re going to overspend, have a plan in place to pay it off after the holidays. This way, you’ll stick to your financial goals and avoid starting the new year with a bunch of December debt.
CreditCards.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,410 adults, of which 1,810 qualified as holiday shoppers. The survey was conducted online between Aug. 18-20, 2021.