Consumers pad holiday budgets with credit card rewards

By , CardRatings contributor
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According to a pair of consumer surveys, Americans will spend about the same this year on holiday gifts as they did in 2010. However, they'll rely more on credit card rewards and retailer sales to squeeze more from their shopping budgets.

The National Retail Federation commissioned researchers to poll over 8,500 consumers about their holiday shopping plans. Respondents said they planned to budget an average of $704.18 to cover the cost of year-end gifts, holiday decorations, and other seasonal merchandise. Six out of ten respondents confided their plans to spend about 20 percent of that budget on sale merchandise. After two years of gift lists that focused on practical home goods and clothing, many respondents said they were ready to "treat their loved ones to something special."

Shoppers have become much more savvy about scouting for holiday bargains, according to the NRF. Their research shows that nearly half of the consumers surveyed planned to shop online, while a third of the respondents were already firing up tablets and smartphones to scour seasonal deal tracking websites. Two in five Americans surveys said they even planned to start their bargain-hunting before Halloween.

Reward credit cards padding holiday shopping budget

The NRF's findings dovetail with the release of quarterly survey statistics from Capital One. The credit card issuer's research team asked for opinions from over 1,000 Americans who currently use rewards credit cards. Over a quarter of respondents said they planned to save their cash back rebates to offset the cost of holiday shopping, instead of paying down a credit card balance or depositing cash into a savings account. More than half of those cardholders planned to maximize their rewards by trading points or rebates for retailer gift cards.

Holiday gifts just edged out holiday travel for the second spot in Capital One's reward usage survey list. Other respondents told researchers that they planned to keep socking away their rewards for retirement or for college savings. According to the survey results, about one in five rewards credit card users keep track of their bonus earnings using their bank's smartphone applications. More than a quarter of respondents said they would love to see an app that would let them see real time reward deals on merchandise in retail locations.

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