Cash is king for holiday shopping

EAST PROVIDENCE, R.I (WPRI) - Cash is no doubt the easiest way to pay. But if you prefer credit, just make sure that come January, the debt you've accumulated should be paid off in 3 months. If you can't, Call 12 for Action has some ideas to help you get through the holiday shopping season. 

Dana Marlowe loves the holiday season. From decorating the house - to buying gifts for family and friends. But that holiday joy fades quickly when the calendar turns and the bills arrive.

"When January comes around, reality shows up in your mailbox." she said.

So this year, she and her husband decided to put the credit cards away and use cash for holiday spending instead.

"We have a spreadsheet for it and we're going to be able to follow it, track it down to zero so that post holidays we don't have any credit card bills to pay off." said Marlowe.

Dana's in good company. While consumer spending is up by 2.2 percent this year, none of the major credit card companies has seen any increase in activity and most have seen a drop in transactions.John Ulzheimer of two-step-credit says the still-shaky economy is partly to blame.

"Cash gives them the ability to control budgetary restrictions." says Ulzheimer. "They're going to spend less if they have cash versus access to credit cards."

But it's not just credit. Gift cards have dropped in popularity this year, too. People are getting tired of all the restrictions these cards impose. But this may only be a temporary dip, in this case, because of protections provided by the card act.

"The card act now allows consumers who give a gift card to another consumer to rest assured that that card is actually going to remain almost fully intact for five full years." said Ulzheimer

So will this switch to cash carry on into the new year? Maybe so, say experts, thanks to a clause in the financial reform bill.
It allows retailers to discount purchases made with cash by two-and-a-half percent, the equivalent of the merchant fee retailers pay when someone uses a credit card.

"We will, in fact, someday see two prices for every single thing we purchase. Whether it's gas, six pack of coca cola or a shirt at the mall."said Ulzheimer.

Credit card companies are not taking this cash trend lying down and consumers should expect to see aggressive credit card offers with financial bonuses to those who do spend a certain amount on their credit card within a set amount of months.