By Matt Thacker
This holiday season, Americans will reach deeper into their pocket books than they have in years, according to a poll conducted by ABC. The expectations for higher spending signal a positive change in consumer confidence, but it could also mean more financial headaches for consumers in January.With the start of the holiday shopping season, students have already hit the malls looking for gifts. For some, shopping for gifts has meant cutting back in other areas.”I’m not getting groceries this month,” joked freshman Jennifer Colgan. She said holiday shopping can be stressful because she doesn’t want to spend too much.According to an annual poll conducted by ABC, Americans plan to spend on average $1,096 on holiday gifts this year. This year was the first year since 1999 that the amount reached $1,000.Finance professor Dr. Russ Ray recommended shopping at discount stores or national chains rather than at specialty shops, which can get more expensive. He also said students should be sure to keep track of how much they spend and not go into debt.”Be very careful of the credit cards,” Ray said. “Make sure you pay off the full balance when it comes. The credit card industry is a real racket these days.”The reason Ray believes credit cards are dangerous is that if one credit card is at or near its maximum spending amount, companies can raise the interest rate on all credit cards owned by that person.Kyra McCormick, branch manager at Your Community Bank in Jeffersonville, Ind., recommends using cash to shop. She said it’s easier when you use a credit card not to realize how much you’ve spent.”It is very hard for people to stay conservative with their spending during the holidays,” McCormick said. “They want to buy what their family wants, even though they may not have the money.”She has seen people take out consolidation loans to consolidate the accumulated credit card debt, or file for bankruptcy around the holiday season. This hurts your credit score, making it even more difficult to apply for loans.Freshman Kyle Ford said he’s not too worried about his spending this year. “I’m not really stressed about it,” Ford said. “I just make sure I don’t overdraw on my account.”According to Nellie Mae, 76 percent of undergraduate college students reported having credit cards in 2004. The average outstanding balance on their credit cards was $2,169.Nearly 40 percent of those surveyed said they used credit cards to shop for gifts. But some students have changed their spending habits to avoid debt. Kasey Blackfoot said she hasn’t been buying as much for herself so she could save money to buy presents.Despite their good intentions, some students will inevitably spend more than they planned. Ray says there are ways to help minimize the consequences from overspending.He said nonprofit credit counseling agencies can give advice for how to budget and eliminate debt. He warned against using for-profit agencies, though, because he said once they get your money they will lose interest in helping you. Nonprofit agencies are more concerned with helping rather than making money.But the best way to avoid financial problems this holiday season is to plan ahead and use credit cards sparingly, he said.
