A third of U.S. consumers plan to cut back on holiday spending this year, according to a recent survey from myFICO.com. But a quarter of them still think it will take more than three months to pay off their holiday expenses.
The survey also found that almost two-thirds of consumers plan to charge less than $500 on their credit cards this holiday season. Half plan to put all of their Christmas shopping on their cards, while a third will pull out the plastic for just the most expensive gifts, according to the survey released Tuesday from the consumer division of the FICO credit score creator.
Anthony Sprauve, a spokesman for myFICO.com, said it's a surprising response, given the strong sales on Black Friday and Cyber Monday.
"Clearly, people are spending," Sprauve says. "It makes you wonder if people are saying one thing, but doing another."
Sprauve said the best strategy to avoid overzealous holiday spending is to create a budget and stick to it. Keeping balances low and paying bills on time not only help a consumer's financial security, but it also boosts their credit scores.
Only 14 percent of the surveyed consumers worried about how their holiday spending might affect their FICO credit score, the most widely used credit score. Sprauve said it's key for consumers to keep their balances between 10 percent to 20 of percent of their credit limit. For example, a person with a credit card with a $2,500 limit should charge no more than $500 on that card.
Opening new store credit cards -- which 1 in 5 consumers will consider doing this season -- hurts FICO credit scores, Sprauve says. A new account shortens the average length of credit history and triggers a hard credit inquiry -- when a lender pulls a credit report.
The survey polled 2,400 adults online in November. Forty-seven percent of the respondents were women and 53 percent were men.
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