Close to Half of Canadians Holiday Shop without a Plan on How to Pay Off Debt Later: National Survey
November 05, 2019 (PRLEAP.COM) Business News(Toronto, ON) November 5, 2019 – While majority of Canadians (73 percent) are likely to make impulse purchases for gifts this holiday season, 40 percent don't have a plan on how to pay for it later, according to a new survey conducted by Rates.ca, Canada's one-stop shop for the best rates on insurance and money products. Buying for friends is a top impulse activity, but shoppers also say they will likely purchase meals (69 percent) and entertainment or events (48 percent) spur of the moment.
While holiday shopping can be fun, nearly half (49 percent) of respondents state that as a result of impulse buying they overspent on holiday purchases last year, with 12 percent of those spending $500 or more than they had planned.
"The holidays are a season for giving, so it's no surprise that Canadians are prone to making impulse buys," said Sara Kesheh, Vice President, Money, Rates.ca. "To prevent a financial hangover in the new year, Canadians should have a plan for their holiday spending."
Impulse Buy Comparison by Region
Holiday shoppers from Atlantic Canada, Manitoba and Saskatchewan are the most spontaneous spenders during the holidays, with 83 percent of respondents reporting they are likely to make impulse purchases on gifts for others, while British Columbians are the least likely (65 percent).
B.C. residents, on the other hand, are most likely to purchase impromptu travel during the holidays, at 25 percent compared to the Canadian average of 18 percent. Quebecers (46 percent) are more likely to make impulse purchases for themselves compared to the rest of Canada (38 percent).
Impulse Buy Comparison by Gender
Further analysis shows that women (77 percent) are more likely than men (68 percent) to impulse buy gifts for others. Whereas men (42 percent) are more likely than women (38 percent) to make holiday purchases for themselves on impulse.
There are ways to help curb overspending without being a Scrooge. To help Canadians better manage debt and spending over the holidays, Kesheh suggests planning ahead before hitting the stores. Comparing features and benefits of credit cards, such as low balance transfer cards, or looking for offers on no-fee credit cards can also help.
"Before you start shopping, create a holiday to-do list. Make a list of people you want to buy gifts for, identify gift ideas for each person which naturally leads to more thoughtful gifts as well, and set a budget," she said. "Next, set aside money each week to build up a holiday spending account and determine how you will pay for purchases. Decide if you will use cash, debit or credit for each item – this will avoid unexpected surprises when you open your credit card bill in January. It may be a good option to use no annual fee rewards cards or rich cash back cards to earn points or cash back savings to off-set holiday expenses and gifts."
The survey also revealed:
• Canadians under age 55 were most likely to impulse buy entertainment/events (54 percent), and gifts for themselves (48 percent).
• Canadians aged 55+ stated they were more likely to make charitable donations (33 percent) on impulse.
• More than half (60 percent) of families with children reported overspending on the holidays last year.
• Thirty-nine percent of families with children under 18 sacrificed spending in other areas to manage their debt.
• Forty-six percent of those surveyed with no children under 18 ignored their holiday debt, while only 27 percent of families with children did nothing.
• Fifty-four percent of holiday shoppers had a plan for managing their celebration-related debt.
• Among Canadians who had a plan to manage their post-holiday debt: 31 percent spent less in other areas, while 24 percent resorted to taking money out of their savings.
• Fifty-one percent of respondents 55+ ignored their holiday debt, compared to 34 percent of those under age 55.
To review the findings, visit Rates.ca.
About the Survey
An online survey of 1593 Canadians was completed between October 4-7, 2019, using Leger's online panel. The margin of error for this study was +/-2.5%, 19 times out of 20.
Rates.ca is Canada's one-stop shop for the best rates on insurance and money products. Rates.ca publishes rates from 30+ insurance providers so that shoppers can find the best rates for themselves. Use the site to find the best rates for auto, home and travel insurance, mortgages, and credit cards. Headquartered in Toronto, Ontario, Rates.ca is located at 360 Adelaide Street West, Suite 100, Toronto, ON, M5V 1R7