While the time of year most synonymous with all things scary – Halloween – has come and gone, it’s the upcoming holiday season that has got a number of Canadians spooked.
According to a new survey from Ratehub.ca that polled over 1,200 people, almost one in three Canadians (31%) are afraid to look at their credit card bill come January after they’re done holiday shopping. Our survey also found the majority of Canadians (61%) agreed with the statement “the holidays are the most stressful time of the year financially.”
With the added monetary pressures and the looming stress of a larger-than-normal bill, it’s not surprising that our survey indicates many Canadians say they will carry over a credit card balance after the holidays – often succumbing to the social pressures associated with gift giving.
Almost 1 in 3 holiday shoppers are not using credit cards to their advantage
For Canadian shoppers who plan on using credit cards for most of their holiday purchases, close to 1 in 3 (30%) said they will require “more time” to pay off their credit card statement – with 33% stating they would carry a balance for over 3 months.
Carrying a balance is always to a cardholder’s detriment, and in the case of holiday shoppers, can mean having to shell out extra money on top of the initial price of gifts in the form of interest charges.
For the majority of rewards credit cards, carrying a balance will result in annual interest charges of 19.99% (or 0.055% each day a balance is carried over). To minimize interest charges, cardholders should prioritize paying down their balance and minimizing the amount of new purchases they charge on their card. Additionally, cardholders can decrease interest payments by moving their balance over to a new credit card with a lower interest rate (in what’s known as a balance transfer).
Most holiday shoppers are staying on top of their credit card bills
On the other end of the spectrum, 70% of survey respondents said they will pay off their post-holiday credit card bill on time by the date indicated on their monthly statement. This signals that the majority of Canadians are making the most of their credit cards – avoiding interest charges by not carrying a balance and maximizing their ability to accrue rewards on every dollar spent on gifts and holiday get-togethers.
In a previous study conducted by Ratehub.ca in February 2018, it was found that Canadians can earn upwards of $1,000 in rewards over the course of a year when strategically using one of the best credit cards in Canada and paying down their balance each and every month.
Additionally, a minority of 7% of Canadians said they’ll dip into their savings to pay for holiday gifts – instead, opting for a credit card, debit or cash they have on hand. This marks a positive sign that Canadians are not leveraging their nest eggs to cover the cost of presents.
Talking to friends and family about holiday budgets
Money (or personal finances) is not an easy topic to talk about with your inner circle of friends and family, and it turns out, Canadians are split down the middle on whether to bring it up during the holidays.
38% of Canadians said they had no qualms about speaking up to let it be known that they’re uncomfortable with or cannot afford to spend over a certain amount of money to meet family and friends gift expectations. Meanwhile, 42% said they would “just let it go” and spend the amount of money required to meet the spending expectations of their friends and family, and 12% would spend less on gifts and not bring it up at all.
Social pressures associated with gift giving proved to be a considerable factor that pushed Canadians to overspend, as 1 in 4 Canadians answered yes to the question: “Do you spend money that you don’t have and go into debt to keep up with expectations from friends and family around the holidays?”
- Almost 1 in 3 Canadians (31%) are afraid to see their credit card bill in January
- 30% say they will not be able to pay off their credit card statement on time after the holidays and will carry a balance
- A quarter of Canadians (26%) answered yes to the question: “Do you spend money that you don’t have and go into debt to keep up with expectations from friends and family around the holidays?”
- When it comes to setting spending expectations for gifts, only 38% of Canadians said they would speak up if they were uncomfortable with or could not afford to keep up with the expectations of friends and family
The bottom line
The holiday season is the prime shopping time for Canadians, many of who admit they’ll experience some sticker shock when their credit card bill arrives in January. Despite being faced with bigger credit card bills, the majority Canadians are prepared to pay off their statements while a considerable minority of Canadians are carrying over balances and overspending just to keep up with the spending habits and gift expectations of their friends and family.
- Shopping tips for before, during and after the holidays
- Best cash-back credit cards in Canada for 2018
- 3 Reasons Why You Should Consider a Low Interest Credit Card
A sample of over 1,200 Canadian residents were surveyed online by Ratehub.ca from October 11-November 2, 2018 as part of Ratehub.ca’s 2018 Holiday Spending Expectations Survey. The survey asked Canadians about their comfort levels with holiday spending expectations.
For more information about survey findings or to set up a media interview please email Tara Bolger ([email protected]).