As cost-of-living pressures and higher interest rates continue to squeeze household budgets, the Christmas spending season is likely going to look a lot different this year.
New research released from Westpac shows that almost three quarters of Australians (74%) said that Christmas will be a “much smaller affair” this year, with 72% of those surveyed stating they will be cutting back on their Christmas spending.
Steve Rubenstein, Westpac Managing Director, Consumer Finance, said: “Budgeting is top of mind as we head into the peak spending season with households planning smaller and simpler festivities with the higher cost of living.”
“We know that on average, Australians are planning to spend $836 in total this Christmas, with millennials intending to spend the most at $948,” said Mr Rubenstein.
Research from Westpac shows that for those still planning to spend, the most popular industries where we’ll be flashing the cash are:
- Food and drink (46%)
- Clothes and personal items (29%)
- Travel (24%)
- Celebrations (20%)
- New technologies (14%)
- Entertainment (13%)
- Home maintenance or DIY (11%)
- Beauty services (11%)
Many households will likely be considering doing some of the bulk of their Christmas shopping in the upcoming Black Friday and Cyber Monday online shopping deals. In fact, last year Australians spent $7 billion in these sales, with Australian Bureau of Statistics (ABS) data showing that the events helped lift retail figures by 1.4% in November 2022.
For those hoping to get through the silly season by using their plastic, it's a timely reminder for everyone to exercise caution and steer clear of credit card debt.
How to avoid credit card debt this Christmas
The latest data from the ABS shows that Australia’s total credit card debt has decreased four months in a row, with a drop of $158 million between August and September. However, the number of credit card accounts continue to rise, with almost 200,000 more created year-on-year.
This goes to show that while credit cards might be making a comeback, Australians are making sure to pay their balances in full each statement period. Which is why it’s crucial to avoid letting this good work go to waste over the festive season.
RateCity tips to avoiding a Christmas credit card hangover
- Set a budget: It seems simple, but establishing a clear budget for your holiday spending will help you to avoid getting in over your head. Outline exactly how much you can afford to allocate that you can pay off in time, and stick to this.
- Comparison shop: Compare deals and prices before making a purchase - particularly in the Black Friday and Cyber Monday sales. Online tools and apps may help you find the most cost-effective options for the items on your shopping list.
- Low interest rate cards:If you know that you have trouble paying your balance in full each statement period, consider switching to a lower-rate credit card.
- Cash or debit cards:Alternatively, you could consider using cash or debit cards instead of credit cards. This can help you to spend only what you have and avoid accruing interest on credit balances.
- Rewards and discounts: If you have credit card rewards or loyalty points, consider using them for holiday purchases. Additionally, take advantage of any discounts or cashback offered by retailers. For example, Westpac is integrating cashback offers into its mobile app.
- Secret Santa:If you have a large group of friends or family, suggest a Secret Santa, where each person buys a gift for only one other person. This can significantly reduce individual spending.