Investors express little inclination to spend more on gifts this holiday season, and even less to take on debt, according to the latest Millionaire Corner research. Find out more.
Consumers are showing little zeal for holiday spending this year, and even less appetite for debt, according to a survey of more than 1,200 investors conducted by Millionaire Corner in September. A host of financial concerns – particularly a drop in discretionary income – are putting the damper on spending and borrowing.
The vast majority of investors say they plan to spend the same or less for holiday gifts, and appear extremely unlikely to take on consumer debt in the process, according to our research. More than 70 percent of investors, who represent a range wealth levels, say they will spend the same as last year, while 15 percent say they will spend less and roughly 14 percent will spend more.
What are the primary reasons for this overall decline in holiday spending? More than half cite “less disposable income,” but one-third say they believe the economy is worse and more than one-fourth say they are worried about their “financial position.” Additionally, about 17 percent say they have not been able to “save properly” for the holidays. Investors with a net worth of less than $100,000, not including primary residence, express the highest level of concern over the U.S. economy and their personal financial situation.
It follows that investors show little inclination to take on debt to finance their holiday spending. Only 10 percent say they will borrow in order to buy. Notably, Millionaires, who place a premium on frugality, are the least likely to charge their way through the holiday. Only 4 percent of Millionaires say they are willing to take on debt, compared to 15 percent of investors with less than $100,000. Most of the less affluent investors (61 percent) would borrow $100 up to $500, while 36 percent would borrow $500 up to $1,000. None is willing to take on more than $1,000 in debt.
Investors appear to be clearly on trend with the deleveraging that began at the start of the financial crisis and has continued through the prolonged economic downturn. According to data released by the American Bankers Association last week, delinquency rates for bank credit cards have fallen below 3 percent to their lowest level since 2001. A delinquent account is defined as one that is 30 days or more behind on payments.
Saving, not borrowing, is funding consumption among the small share of investors planning to spend more this holiday season, according to our research. The largest percentage (38 percent) indicates “I have saved properly to spend more this year,” while 25 percent indicates they have more disposal income. More than 16 percent say they believe the economy is improving, and nearly 37 percent of investors say they’re moved by the “holiday spirit.”