Nearly Half of Polled Consumers Would Prefer to Skip the Holidays
By Gina Ragusa Credit Unions Online
Money woes prompt 45% of surveyed Americans to say they’d rather skip the holidays, however credit unions may have a solution.
When Think Finance released its survey surrounding consumer optimism regarding the holidays, a staggering 45% said they were in no financial shape to celebrate this year.
The firm, a provider of financial alternatives to the under and unbanked consumer, talked to 1,000 Americans from diverse income levels, who tap into a variety of alternative payment forms including payday loans, prepaid debit cards and direct deposit advances.
While more respondents this year had a better attitude about affording the holidays this year than last; a high number of consumers still said that the holidays produce far too much financial stress and strain due to not having enough cash set aside for gifts this year. NBC News pointed out that last year’s survey focused primarily on those with annual incomes of $50,000 or less; whereas this year’s poll included those coming from a wide variety of income levels.
“The economy has shown gradual improvement in recent years, but everyday Americans are still working hard to cover expenses making holiday spending particularly stressful,” Think Finance CEO Ken Rees tells NBC News. Other noteworthy points from the survey include:
85% said they plan to spend the same amount of money or less on gifts this year as they did last year.
54% said they would spend $500 or less.
27% reported that they would spend between $500 and $1,000.
41% plan to use a retail layaway program--half of those making between $75,000 to $99,999 said layaway was their chosen method and 32% earning over $100,000 will be turning to layaway.
Two-thirds of the survey respondents said they would be looking into financial alternatives to pay for gifts, saying they wish they had more options to help them afford the holidays.
“Alternative” Payment Methods that Make Sense
Although a high number of Think Financials’ survey respondents reported they would be tapping into an “alternative” source, payday loans and other high rate loans are possibly the top resource for the majority of those consumers.
Unfortunately consumers who have not discovered the benefits of credit union membership are unaware of the flexible choices and low rate payment alternatives offered at a credit union.
With 59% of survey respondents reporting that they foresee carrying holiday debt well into 2013; many have resigned themselves to thinking that they have no other options.
Brian Wilcox, Chief Marketing Officer at First Commonwealth Federal Credit Union ($528 million, Lehigh Valley, PA) says that consumers don’t have to fall victim to high rate loans in order to pay for the holidays. The credit union offers a loan skip-a-payment and low interest holiday loan to helps its members have a happier holiday.
He says that both products lessen the financial burden in different ways. “For skip-a-pay, they (members) save the amount they would normally need to pay on their loan, minus a $35 processing fee,” he explains. “The interest does continue to accrue, but they have extra money in their pocket for the month to use for holiday shopping, or whatever their need may be.”
Wilcox says that for the short-term holiday loan, members get a rate as low as 4.99% for 12 months. “So, they would save whatever the difference would be to borrow elsewhere at a higher rate. Most would probably use a credit card instead, which obviously would carry a much higher interest rate.”
First Commonwealth FCU offers skip-a-pay twice a year (during the holidays and the summer), which is very popular. “We typically get a double-digit response rate. During last year’s holiday skip-a-pay promo, the response rate was over 13%,” he says. “The holiday loan isn’t quite as popular, but we do get regular takers.”
Credit unions across the country are offering other ways to money save money, which can help during the holidays.
For example, when member Florida resident Jeff Burto wanted to refinance his Toyota Highlander, he ended up saving an extra $325 a month by going to Tropical Financial Credit Union ($866 million, Miramar, FL).
Helen McGiffin/COO told The Sun Sentinel that the credit union was offering loans as low as 1.49% last week for a new or used vehicle, and refinancing rates were as low as 2.5%. Monthly savings like that can free up holiday cash flow for a multitude of members.
Although Tropical Financial isn’t offering holiday specific loans, members can take advantage of a no-fee Visa balance transfer promotion at 0% (introductory rate).