• 25% fall in number of people paying for Christmas by credit card;
• Loyalty points, savings stamps, gift cards and hamper schemes on the rise

UK consumers are responding to the economic crisis by reducing the amount of money they plan to spend on credit cards this Christmas, according to research by Deloitte, the advisory firm.  Just 12% of consumers plan to pay for the majority of their Christmas gift and food shopping on their credit cards this year.  This is down from 16% last year and 17% in 2006.  By contrast, 83% of people plan to use cash/debit cards for the majority of their spending compared with 80% last year.

Men appear to be the biggest drivers of this credit cutback, with 12% intending to fund Christmas by credit card, compared to 19% last year.  Women’s spending habits remain largely unchanged with 12% using cards this year compared with 13% in 2007. 

Consumers in Wales (1%), Northern Ireland (6%) and the North East (6%) are least likely to use credit cards this Christmas, while 18% of consumers in the South East still intend to pay for the majority of their Christmas gifts and food by credit card.

Nick Sandall, head of retail banking at Deloitte, said: “Consumers still want to enjoy themselves this Christmas, but they are not prepared to overstretch financially in order to do so.  In part, the reduction in the use of credit cards is down to the lack of available credit, but consumers are also trying to cut down their personal debt levels in advance of the impending recession.”

As consumers lose their appetite for debt, more traditional methods of savings are rising in popularity.  The number of people saving for Christmas is static this year with 51% of the population again putting money aside.  However, the methods of saving have changed.  18% of consumers saving for Christmas intend to use savings stamps this year, compared to 10% last year.  Loyalty points (25% in 2008; 16% in 2007), gift cards (15% in 2008; 7% in 2007), Christmas clubs (8% in 2008; 7% in 2007) and hamper schemes (6% in 2008; 3% in 2007) are all increasingly popular this year as the credit crunch begins to bite.

Tarlok Teji, head of UK retail at Deloitte, added:  “The current loss of consumer confidence in the economy has resulted in a resurgence of the more traditional saving methods among some consumers.  This could translate into a wider adoption of shopping saving schemes such as loyalty cards and Christmas clubs.  This presents an opportunity for retailers to engage with their consumers and reward loyalty.”

Consumers in the South West are most enthusiastically embracing savings schemes, with 46% of those who save for the festive season using loyalty points, 30% using savings stamps and 23% gift cards.

Download the full press release 'Consumers shun credit this Christmas' (with supporting tables). (PDF, 186KB)

Ends

About this survey 
The survey findings were based on consumer data obtained by market research undertaken by TNS on behalf of Deloitte. Over 1000 adults aged 16+ were interviewed between August 29th and August 31st 2008 and again between October 31st and November 2nd.  The results of the second survey showed no material change to the original results. The respondents were selected according to a quota sample designed to be representative of all UK adults. Replies were also received from questionnaires sent out to over 350 of the United Kingdom’s retailers.  The retailers were from a cross-section of the industry.

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country's leading professional services firms. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities.  Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms. The information contained in this press release is correct at the time of going to press.