With the holiday season nearing, Canadians are planning to temper their spending with almost one-third (31 per cent) saying they will spend less on holiday expenses this year, according to a recent RBC survey. Furthermore, more than half (55 per cent) plan to keep their holiday spending flat and almost one-in-five (18 per cent) say they are not in a position to give gifts at all this year.
While most Canadians intend to give gifts this holiday season (82 per cent), they are planning to spend almost $100 less this year with an average of $624, compared to an average of $728 in 2009. In total, Canadians expect to spend approximately $1,137 on the holidays including gifts, decorations, entertaining and travel. This is approximately seven per cent less in total than last year, when Canadians also reported they would be cutting their holiday budgets.
“Canadians are clearly keeping an eye on household spending and taking a cautious approach when it comes to holiday purchases, but there are ways to get into the spirit of the season without breaking your budget,” said Karen Leggett, senior vice-president, RBC Cards and Payment Solutions. “Setting a realistic spending limit well in advance and monitoring your purchases as you go can help ensure you don’t end up with unmanageable bills at the start of the New Year.”
The majority of Canadians (63 per cent) plan to fund their holiday cheer with savings and one-in-five (21 per cent) plan to use credit cards; however, 20 per cent say they are not sure how they will pay for the season.
The RBC survey also found that a third of time-crunched gift givers (35 per cent) plan to do some of their holiday shopping online this year.
“Whether you want the hustle and bustle of the in-store experience or are looking to save time by shopping online, using a credit card for purchases offers both convenience and protection. This is also a great way to keep track of expenses and take advantage of card rewards programs even if you use your savings to pay the balance by the due date,” added Leggett.
RBC offers the following tips for holiday spending to help ensure that you stick to your holiday budget while enjoying the spirit of the season:
Cash in your points – If you’ve collected reward points that haven’t been used consider redeeming them for store gift cards or merchandise that can be given as gifts without spending an extra penny.
Don’t spend more, spend smart – If you plan on covering your holiday costs with savings, you can actually make your money work harder by using a credit card for purchases and then paying off the balance by the due date. Many people rely on their credit cards for larger purchases but may not use it for everyday shopping instead of using cash. Holiday spending on groceries, gas, restaurants and clothing can add up quickly, and using your card can make it easier to keep track of your expenses. You will also earn rewards more quickly while taking advantage of a temporary interest-free loan on purchases.
Take advantage of time-limited offers – Credit card rewards programs often have specific times where you can earn more rewards than usual. For instance, an RBC Visa Cash Back Card offers one per cent back on purchases and five per cent cash back on grocery purchases until the end of December 2010. Using this card could help take a bite out of gift and entertaining costs.
Consider RBC Visa gift cards – Have someone that’s ‘hard to buy for?’ Instead of a store gift card, consider an RBC Visa gift card – it can be used anywhere Visa is accepted and for a wide variety of items from gas to groceries.
Purchase Security and Extended Warranty Insurance – Take advantage of the Purchase Security and Extended Warranty Insurance on gifts, including many electronic products that personal RBC credit cards offer. Need help finding the right card? Visit the RBC Advice Centre.
Look for the Verified by Visa; MasterCard SecureCode when shopping online –It’s a simple and secure way to pay at participating online stores, while protecting yourself against unauthorized use of your card.
Build up reward points during a heavy spending period – but be sure to have a plan to pay off your holiday credit card bills (and consider lower cost borrowing alternatives).
Whether Canadians want to borrow with confidence, get more from their everyday banking, protect what’s important, save and invest or take care of their businesses, the RBC Advice Centre http://www.rbcadvicecentre.com/ can help answer their questions. Advice videos are updated regularly to reflect current trends and to answer the questions that are top of mind with Canadians. Interactive tools and calculators provide customized information covering many facets of personal finance. With the guidance of RBC advisors who are available to chat live, Canadians have access to free, no-obligation professional advice about RBC products and services and personalized one-on-one service. In addition, all personal RBC online banking clients have access, at no cost, to myFinance Tracker (www.rbcroyalbank.com/myfinancetracker), RBC’s new online financial management tool, that enables them to track and manage their money in a simple and clear way.
About the RBC survey
The RBC survey was conducted online via Ipsos Reid’s national I-Say Consumer Panel to 3,160 Canadians (423 British Columbia, 299 Alberta, 219 Saskatchewan/Manitoba, 1,194 Ontario, 775 Quebec, 249 Atlantic Canada). Weighting was then employed to balance demographics and ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. Data collection was October 4-11, 2010. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of ±1.7 percentage points, 19 times out of 20, of what the results would have been had the entire population of adults in Canada been polled.
For further information:
Kathy Bevan, RBC, (416) 974-2727
Jacqui van der Jagt, RBC, (416) 974-1756