It's starting to look a lot like cash, er, Christmas...

So who's planning on just spending cash this Christmas and cutting up their credit cards or putting them in a drawer? Raise your hand.


Well, according to a recent story, that's what a lot of people are doing this holiday season.

While the story is well-written and a generally good read, I'm not sure their subhead "Fed up, some consumers are paying with cash instead of plastic" is breaking news any longer. But there were some nuggets of interesting takeaway information, namely:
  • According to Consumer Reports, 13.5 million people -- 6% of consumers -- are still carrying debt from last year's Christmas shopping season.
  • And that number, I suspect, would be even higher if it weren't for this salient fact: Outstanding debt has fallen for 13 straight months, according to the Federal Reserve. The nation's consumers owed $975.2 billion in credit card debt in September 2008; now we collectively owe $888.1 billion. Whatever you think of that number, it is an improvement.

Ultimately, I think January 2010 will be eye opener for a lot of consumers. There are going to be those who don't overspend and just pay cash and who'll be pleasantly surprised when they don't have credit card bills coming in January and February, or at least bills bringing fresh bad news. And there'll be those people who, in the heat of the shopping moment, did end up overspending on their credit cards, and come next year, they'll experience that inevitable sticker shock.

Right now, the average standard fixed interest rate for credit cards is 13.47%, and 11.48% for a standard variable rate, according to But that's just the average, of course, and for those people who have cards with interest rates that have climbed into the 20s, a little more sticker shock is probably right around the corner.

All the more reason to make it a cash Christmas.
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