Nearly half of American consumers have made an unplanned internet purchase in the past three months, and one in seven have done so in the past week, according to a new CreditCards.com poll.
A new poll by CreditCards.com found that almost half (44 percent) of Americans have made an unplanned buy on the internet in the past three months, almost one-third (29 percent) have done so in the past month and one in seven (14 percent) in the past seven days. That number climbs even higher amongst older millennials, with one in five (21.6 percent) of 28-to-37-year-olds saying they made a spontaneous online buy in the previous week.
In fact, older millennials and Gen Xers are less likely than other age groups to resist making unplanned internet buys. Only about one in five in each group (21.8 percent of older millennials and 23.3 percent of Gen Xers) say they have never made this type of purchase. That means almost 80 percent have made a split-second buying decision while perusing the web.
Online shoppers may be more likely than store shoppers to make impulse purchases, says Kit Yarrow, a consumer psychologist and author of “Decoding the New Consumer Mind.”
Why? Once you’ve mentally committed to buying an item online, you know you’ll have to go through the required steps such as entering your information and dealing with shipping costs, so you may be more open to tossing additional stuff into your cart.
Online retailers also entice shoppers to make add-on purchases with offers for discounts or free shipping above a certain dollar threshold, as well as targeted suggestions for other items to buy, Yarrow points out.
“Online, even more than in stores, we tend to have \u2018open purse syndrome,’” she says.
Buying staples online can lead to overspending
It’s not just shiny baubles and cool gadgets that get Americans shelling out cash online in both planned and unplanned purchases. The poll also found consumers are buying everything from brie to Brillo pads with the click of a button. Here’s who’s buying what, and how often:
- Groceries – About one in four shoppers (26.1 percent) buy groceries online weekly and 1 in 10 (9.1 percent) does so monthly.
- Prepared food and drinks – About one-fifth (20.5 percent) purchase prepared food and drinks weekly and one in 10 (11.1 percent) do so monthly.
- Travel – Almost 60 percent of consumers buy airline tickets, hotel stays, rideshares and other travel necessities online at least once a year.
- Streaming services – One in eight (12.6 percent) pay for streaming services weekly while more than a quarter (27.6 percent) percent buy them monthly.
“Overall, more and more purchasing is taking place online,” says Keith Niedermeier, a marketing professor at the Wharton School of the University of Pennsylvania. In fact, U.S. Census data show e-commerce comprised nearly 10 percent of all retail sales in the second quarter of 2018.
The challenge of ordering convenience foods and fresh items online has held those numbers down, but the rise in delivery services is sending more consumers to the internet to shop for these items, Niedermeier says. For example, Amazon is now using Whole Foods locations as distribution and delivery points for groceries. “Companies are removing barriers to get people to buy more, and buy more often, online,” he says.
Consumers who buy groceries and household staples online may be more likely to throw extra items into their cart without comparing prices, Yarrow points out. “They may not realize they’re paying $2 more for Q-Tips than they would at the grocery store,” she says. “It’s not necessarily thoughtful, rational purchasing.”
But in some cases, if you have the money and you’re spending those extra few dollars to save precious time, it might be a fair trade off, Yarrow says. “For a lot of people, it is,” she says.
See related: Will mobile wallets make us poor?
Credit is the safer choice for online shopping
How are consumers making their online purchases? Credit cards are almost twice as popular (62 percent) as debit cards (32 percent) for online shopping, the poll found.
This is good news because credit cards offer more consumer protections, and virtually all issuers offer zero liability for unauthorized purchases. Also, a fraudulent credit card purchase does not actually remove funds from your personal bank account, unlike with a debit card.
However, one age group, younger millennials ages 18 to 27, favors debit (54 percent) over credit (42 percent) for online purchases. And amongst all millennials, credit (50 percent) and debit (47 percent) were nearly tied in popularity.
Millennials and other shoppers using debit cards for online transactions should monitor their bank accounts closely for errors and fraudulent charges. If someone makes an unauthorized purchase using your debit card number, you’re responsible for up to $50 if you report the theft within two business days after discovering the theft or loss. If you report the theft less than 60 calendar days after discovering the card loss or theft, you may be liable up to $500. After 60 days, you may find yourself out all the money taken. So, the sooner you report the theft, the better, and some financial institutions may be more lenient reimbursing you.
Nevertheless, when a thief drains your account, you’ll most likely be stuck without the money to pay your rent, car payment or other bills while the bank investigates.
So rather than using debit cards, consider shopping online with a rewards credit card, which will not expose your bank account info to fraudsters and will allow you to earn an extra 1-5 percent back on your online purchases or points or miles.
Always check out as a guest
The silver lining to the frequent use of debit cards online is that many consumers decline to store their debit card information with online retailers. While over half of shoppers (56 percent) have saved their payment information online (and even more Northeasterners have done so, at 66.5 percent), they save credit card info more often than debit card digits.
About one in three internet shoppers (34.2 percent) say they’ve saved only their credit card info online, while one in 10 (10.8) percent have saved only debit card info and about the same number (11 percent) have saved both.
However, over one in four (26 percent) of younger millennials have saved only their debit card info online, while over one in 10 (11.8 percent) have stored both debit and credit card information.
To shop more securely and to make impulse purchases more difficult, experts recommend you avoid saving your credit or debit card information when you pay online.
“Check out as a guest each time,” online shopping expert Michelle Madhok recommends. “This adds an extra hurdle that will help you to control yourself.”
See related: Online sales are fastest-rising cause of consumer complaints
How to curb the urge for online impulse buys
Is online impulse buying ever OK? It’s only a problem when you’re buying things you don’t need or spending money you don’t have, Madhok says. If you fall into one of those categories, here are five tips to cut back on spontaneous spending:
- Walk away from your cart. Put items you’re considering into the online cart, then click away from the site for 24 hours. “It’s kind of the equivalent of taking a walk around the block,” Madhok says. You get time to think through the purchase, and the retailer may try to entice you to complete the purchase by sending you a discount offer that can save you money if you do decide to buy.
- Watch out for shopping apps. Shopping apps can be dangerous, especially if you have alerts turned on. Consider deleting the apps or at least turning off alerts when you’re not in shopping mode, Madhok says.
- Make a list and stick to it. Make a list of items you need and items you want, Yarrow recommends. Then do your research, plan the purchase and buy when the time is right. “If a frying pan goes on sale, but what you really wanted is a Le Creuset, don’t buy it,” she says. “Wait and get what you really need and want.”
- Shop smart. When you want to make a purchase, do your research first, says Chelsea Hudson, personal finance and shopping expert for TopCashBack.com. Read customer reviews and check Google to see which merchant has the best prices. Then look for discounts and consider using a cash back credit card to layer your savings. It’s a good idea to keep a mental note of which stores frequently offer nice discounts, such as the perpetual Bed, Bath & Beyond 20 percent off coupon, she says.
- Do a price check. If you tend to buy household staples online, compare online versus local store prices on a few items you buy regularly, says Yarrow. “See if there’s a big difference,” she says.
Hunting for online deals is a great way to save, but it can also spur impulse purchases through fear of missing out and the thrill of the hunt for a bargain, Yarrow says.
And retailers encourage this behavior through almost constant communication, Hudson says: “Whether it’s email promotions, coupons, one-day sales or social media posts, they are constantly tempting consumers to shop.”
The study was conducted online in GfK’s Omnibus using the web-enabled “KnowledgePanel,” a probability-based panel designed to be representative of the U.S. general population, not just the online population. The study consisted of 1,002 nationally representative interviews conducted between Sept. 28-30, 2018 among adults aged 18 and over. The margin of error is plus or minus 3 percentage points.