Survey: Over a Third Frequently Engage in Retail Therapy
If you’re shopping to help get out of a pandemic funk, you’re not alone. According to a U.S. News survey, a chunk of people have been doing a lot of retail therapy.
In a survey conducted in late May early June 2021 on Americans’ post-pandemic spending habits, almost 34% of those who say they practice retail therapy do it frequently.
A little more than two-thirds of respondents say that while they participate in retail therapy, they don’t do it often. I’m all for treating yourself now then, but it becomes a big problem if you aren’t keeping track of your spending.
Majority of Spenders Have No Budget
Credit card balances have been dropping in 2021. This is consistent with the combination of having limited spending opportunities during the pandemic paying down debt, according to the Federal Reserve Bank of New York.
But as credit card issuers start flooding the market with new credit card offers, balances are expected to increase. With pent-up demin mind, survey respondents were asked what post-pandemic activity they looked forward to the most. About 27% have no special plans, but among those expressing a preference, they plan to engage in the following activities:
- About 40% are most interested in traveling again.
- More than 23% say they want to go to a restaurant or bar.
- About 16% want to go to a concert or some other public event.
- Almost 6% want to go shopping.
- Around 4% plan to go to a wedding or private event.
If you have the money, it’s fine to engage in activities that you’ve missed. But nearly 51% say they don’t have a budget, which can lead to overspending debt. Of those who do have a budget, only 49% say they stick to it.
Majority Don’t Have Post-Pandemic Debt
About 67% of survey respondents say they do not have post-pandemic debt, which is excellent news. But that means that about a third of respondents are still dealing with debt.
Of those who are trying to tackle their post-pandemic debt, here are the strategies they’re using:
- Nearly 28% are paying more than the minimum monthly payment required.
- Nearly 21% are using a balance transfer credit card with a 0% introductory annual percentage rate.
- Around 11% are using the snowball method, which starts with prioritizing your credit card balances from the smallest balance to the highest balance. You pay the cards off in that order, beginning with the smallest balance first.
- About 8% are using the avalanche method, which starts with prioritizing your credit card balances from the highest APR down to the balance with the lowest APR. You pay the cards off in that order, beginning with the highest APR.
- Less than 6% say they are using a debt consolidation loan.
Some Say Money Habits Improved During the Pandemic
Although a little more than half say they don’t see a money-related silver lining to the pandemic, other respondents are able to identify how their financial lives have changed for the better.
Among those who say their money habits have changed, more than 43% see changes for the better. About 10% say their money habits have gotten worse. And 47% say their habits changed, but not for better or worse, just different.
More findings about those who say they found a silver lining in the pandemic:
- More than 40% say they were able to save more money during the pandemic.
- Just more than 30% enjoy not feeling pressure to spend money.
- Nearly 30% have rearranged their spending priorities.
Type of Credit Cards Used Most Often for Purchases
Only about 37% of survey respondents say they do not use a credit card when making purchases. Among those who do use a credit card, these are the type of cards used most frequently:
- Slightly less than 42% say they use a cash back credit card.
- About 23% say they use a no-rewards credit card.
- Almost 19% use a travel rewards credit card for shopping.
- About 17% say they use a different type of rewards card.
How to Take Advantage of Credit Card Rewards
If you can use your credit cards responsibly, you can save money on your purchases travel on deep discounts, if not for free.
- Pay your balance in full every month. I listed this first because if you don’t do this, you should not use credit cards at all. When you carry a balance, you pay compound interest. When you pay interest, it offsets any rewards you earn. But a bigger problem is that it leads to credit card debt.
- Set up a budget. Your credit cards should each have a line item in your monthly budget. You also have to track your expenses to make sure you don’t use your credit card for purchases after you reach your limit for the month.
- Use credit cards strategically. I have three different types of rewards credit cards. During the pandemic year, I didn’t travel at all, I cut back on many expenses. But I still earned nearly $3,700 in rewards because I took advantage of new reward offerings on my credit cards, such as grocery discounts streaming services. And I used the right credit card for each type of expense.
- Track your rewards. There are many free or premium online options to help track rewards use them to your advantage. You can also create your own system if you’re handy with Excel. Pick a system monitor it often, especially if you’re trying to meet spending requirements for a new credit card bonus.