Christmas shoppers plan to use more cash, less credit

Here's some good news for the festive season. The majority of shoppers are leaving their credit cards at home this Christmas with plans to pay for purchases with cash.

According to ASIC’s MoneySmart site, Australian households are expected to spend, on average, $1,079 on Christmas, with up to around half this total going on gifts alone.

It’s an additional outlay that can strain household budgets so it’s great to see ASIC also finding that about 60% of us will use cash savings for holiday season spending. Only one in five shoppers are likely to reach for their credit card.

Making it through the festive season without stocking up on high interest card debt is one of the best presents you can give yourself for Christmas. Even better, paying by cash offers scope to ask for a discount. So don’t be afraid to ask retailers for their best cash price.

Interestingly, an Australia Post survey found a whopping 87% of Australians will head online for festive purchases.

Shopping via the internet makes it easy to compare prices and snare a bargain. But in the pre-Christmas rush it’s easy to lose money to a dodgy website especially if you haven’t used the provider before.

Instead of focusing solely on prices, look for some important features to make sure you’re not ripped off. Check the website address begins with ‘https’ and the page displays an icon depicting a closed padlock. These indicate additional layers of encryption to keep your payments secure.

With all the extra spending at this time of the year, it can be tempting to consider – for use next year - a dedicated Christmas savings account.

The idea behind these accounts is that you tuck money away into them throughout the year, and to discourage dipping into the accounts before the festive season, hefty fees apply for withdrawals made before November. So, if financial discipline isn’t your strong point, these accounts can help you save for Christmas. But do note the rate your money will earn is often pretty miserly – in many cases, less than 1.0%.

Alternatively, there are plenty of online savings accounts available that pay over 3.0% interest, and while conditions may apply, the additional interest earnings can be the thing that helps you grow a nice little sack of cash in time for next Christmas.


Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

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