Most Consumers Want a Debt-free Holiday Season, Poll Says

Online, November 4, 2010 (Newswire.com) - When it comes to this year's holiday spending, piling on debt may take a back seat to paying up front.

So says Kathy Banks, Director of Counseling at Consumer Credit Counseling Service of Forsyth. "Consumers are paying attention to their spending in this economy. This year, more consumers plan to pay for their holiday purchases with cash or a debit card, instead of with a credit card or layaway plan," Banks said.

She pointed to a recent online poll from the National Foundation for Credit Counseling(NFCC), where 70% of 4,814 respondents said they would be paying in cash for their holiday purchases this year.

That finding represents a shift in behavior from previous years. Gail Cunningham, spokesperson for the NFCC, said the reasons may be that people are trying to control their spending, or maybe they have limited or no access to credit.

Also in the poll, 10 percent of respondents said they were charging their purchases and paying the bill in full when it arrives. Nine percent were charging purchases and paying for them over time, and 11 percent said they were using layaway programs.

Layaway plans, which have seen a resurgence among some retailers, are generally good consumer tools, Banks said. But consumers need to be aware of the terms of the plan before deciding to undertake this option. In a layaway plan, a buyer makes periodic payments on an item until the balance is fully paid.

No matter what method is used to pay for purchases, developing a realistic plan is key to curbing debt.

"The important thing is to set your spending limit and commit to sticking to it before you start buying," Banks said. "Research and plan your purchases carefully."

The NFCC suggests that consumers consider the following choices, the same that were given to the poll respondents, when determining how to pay for their own holiday expenses.

Paying with cash or using a debit card for purchases - This is a smart choice for many. However, consumers need to be aware that purchases charged to a credit card come with certain protections that aren't available when using a debit card. For instance, according to the Federal Credit Billing Act, you can contest a credit card charge for a product you purchased, but never arrived. Of course you'll need to notify the merchant and the issuer of the problem, and take reasonable steps to prove your claim, but the law is on your side. If you paid with a debit card and have a problem, you may ultimately get your money back, but it will be much more trouble and take longer than if a credit card had been used. Tip: Some credit cards provide protections, too. Before hitting the malls this holiday season, consumers would be well-served to call their credit card issuer and inquire about the protections that come with their card.

Charging purchases and paying the bill in full when it arrives - This is one of the best financial moves a consumer can make. You get to buy now and pay later, build a positive credit history which results in a high credit score, and never pay a cent of interest. You can take advantage of sale items, don't have to carry large amounts of cash, and have all the conveniences of using credit. Tip: Keep track of your spending during the holidays so that you can pay the bill when it arrives. Do this by recording all charges into your check register just as though you were paying for them on the spot. That way you won't be spending money you don't actually have.

Charging purchases and paying for them over time - Consumers who do this are on a slippery financial slope. As well-meaning as a person may be, spending can get out of hand, particularly during the holidays. As a matter of fact, many are still paying for holiday 2009 purchases when they begin charging 2010 items. Adding new debt to old is never smart, and with double-digit interest rates, debt can become unmanageable seemingly overnight. Tip: Commit to controlling your spending during the holidays, and find someone to hold you accountable to that commitment. You owe it to yourself and your family to set the example of responsible financial behavior.

Utilizing layaway programs - Layaway plans allow consumers to make purchases by putting down a deposit which may represent a percentage of the purchase price, and then making installment payments over a period of time until the item is paid for in full. It is not until that time that the consumer takes possession of the item. Layaway is a great tool, particularly for those without access to credit. Tip: Consumers should fully understand the terms of the layaway plan before signing up for it, as there may be a cancellation or restocking fee assessed if payments are missed or if you change your mind about the purchase. Also inquire if you can take advantage of a sale if the item you put in layaway is offered for a cheaper price after you're already in the program.

"It is encouraging to see that the fewest number of respondents, only nine percent, intend to charge their purchases and pay for them over time," said the NFCC's Cunningham. "This signals that consumers more fully understand the potential negative consequences resulting from this decision, and are opting for smarter ways to pay for their holiday expenses."

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About the National Foundation for Credit Counseling
The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation's largest and longest serving national nonprofit credit counseling organization. The NFCC's mission is to promote the national agenda for financially responsible behavior and build capacity for its Members to deliver the highest quality financial education and counseling services. NFCC Members annually help four million consumers through close to 800 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit www.nfcc.org. Visit us on Facebook at http://www.facebook.com/NFCCDebtAdvice and on Twitter at http://twitter.com/NFCCDebtAdvice.

About CCCS of Forsyth
Consumer Credit Counseling Service of Forsyth County Inc.(CCCS) was established in Winston-Salem in 1972 as a non-profit educational organization to help families build wealth, achieve financial self-sufficiency, attain financial stability, and handle financial crises. CCCS offers its services to the community through the Financial Management & Debt Counseling Program, the Center for Home Ownership, the Homebuyer Education Center, the Center for Financial Education, and Senior Financial Care Program. Low or no-cost services include financial assessment counseling; budget review; financial literacy education; Senior Financial Care®; a debt management program to pay off unsecured (credit card) debt; credit report review; homeownership education and counseling; and mortgage default/foreclosure prevention counseling. CCCS partners with families, schools, religious organizations, businesses, government agencies, and other non-profits, serving residents of Forsyth and surrounding counties from offices in Winston-Salem, Kernersville and Mocksville. CCCS was reaccredited in 2007 by the Council on Accreditation (COA). More information is available at www.cccsforsyth.org