KEY POINTS:
For the first time in 16 years, New Zealanders are doubting the security of their regular incomes, but that's not stopping them from putting their Christmas shopping on the credit card, two MasterCard surveys show.
The MasterCard Worldwide Christmas Spend Survey revealed 52 per cent of Kiwis are
planning to use their credit cards over the Christmas period, with 25 per cent putting all or most of their expenses on the card.
While most respondents (80 per cent) say they are looking to rein in their Christmas budgets because of strained finances, they are still looking to spend an average of $945 over the festive season.
These results coincide with the MasterCard Worldwide Index of Consumer Confidence survey revealing consumer confidence has dropped significantly from 12 months ago - falling 3.4 points from six months ago and 22.6 points from the same time last year.
And for the first time in the history of the Index, New Zealanders are
doubting the availability of regular income.
The response for the September survey showed that at 35.3 points, optimism about job security had dropped 24 points from six months ago (59.3) and 45.1 points from a one year ago (80.4).
Financial adviser and author Lisa Dudson says it is worrying that so many people are relying on their credit cards but that it is hard to break bad habits developed over the past few years of easy credit.
"We've been in a society where credit has become easier and, because it's easy, people have got into a mindset where they haven't thought a lot about it," she says.
She says January is often the most financially stressful time for households as they open credit card statements from their Christmas spending and have to figure out ways to pay it back.
Dudson says it is scary and disheartening to be working in budgeting
advice at present as many people who are now in financial difficulties wouldn't have been if they had been more careful.
She advises people to pay cash and says the key is to be conscious about what you are spending money on - thinking of the long-term consequences rather than the short-term gains.
Chief executive of the New Zealand Retailers Association John Albertson
expects the percentage of MasterCard Christmas survey respondents who
said they were curtailing their spending may have fallen since it was
conducted in October as a result of the cut in the Official Cash Rate and lower petrol prices.
He said there was plenty of Christmas spirit among shoppers and that the retail industry was expecting spending to be at a similar level to last year.
The only hope was that consumer spending would not get people into
financial trouble.
Goldman Sachs economist Shamubeel Eaqub said a high number of people spending on credit cards was not necessarily a good thing. The share of
interest-accruing debt has risen sharply, a sign that households are finding it tough and are relying on credit cards the get them through.