Use Cash To Avoid Holiday ‘Financial Hangover’

By Paula Ebben, WBZ-TV

BOSTON (CBS) — The holidays can be a lot of fun, but then the bills start arriving in January. As we all know, that’s not so much fun.

More people are using cash this year, instead of credit, to avoid any kind of financial hangover.

WBZ-TV’s Paula Ebben reports.

Dana Marlowe is one of those people. She loves decorating and wrapping presents. “When January comes around, reality shows up in your mailbox,” she said.

That’s why Dana is buying everything with cash this year.

Consumer spending has been trending up about 2.2 percent this year, but activity at the major credit card companies is flat.

Considering the economic times, John Ulzheimer of isn’t surprised by this trend. ”It gives them the ability to control budgetary restrictions. They’re going to spend less if they have cash versus access to credit cards,” he explained.

Consumer expert Jim Brown believes that recent changes in credit card laws have forced shoppers’ hands as well. “A lot of issuers have lowered consumer’s lines of credit. They’ve raised fees,” he added.

There’s another clause in the credit card bill that’s expected to impact shoppers. Retailers will be allowed to discount purchases made with cash by 2.5 percent.

That’s equivalent to the fee retailers pay to the credit card companies on each transaction.

Ulzheimer expects stores to react to this change. “We will, in fact, some day see two prices for every single thing we purchase. Whether its gas, a six pack of Coca Cola, or a shirt at the mall,” he said.

For now, Dana’s determined to keep the cards in her wallet this year so she can start next year debt free.

“It’s critical to know how much you’re going to spend so your buying season doesn’t get out of control,” she said,

The average credit card debt per consumer is now falling. It’s under $5,000, for the first time since 2002.

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