| December 1, 2011

Black Friday credit card use spiked

In keeping with recent trends, consumers continued turning more toward their credit cards to finance their holiday gift purchases on Black Friday, and overall, the amount of money spent on the shopping holiday increased significantly.

The amount of money spent on credit and debit cards for Black Friday promotions, some of which actually began on Thanksgiving this year, grew appreciably this year, according to data from First Data’s SpendTrend analysis of Black Friday sales figures. Overall, the amount of money spent on consumers’ credit and debit cards grew 6.3 percent for Thanksgiving and Black Friday 2011 over the same days last year, and the overall number of transactions jumped 7.3 percent. This change was largely surprising because the same days in 2010 saw a significant increase in the amount of money spent on shopping.

In addition, the promotions offered on Cyber Monday, the online equivalent of Black Friday, led to year-over-year dollar volume growth that approached 20 percent, the report said.

“The holiday spending season is off to a good solid start,” said Silvio Tavares, senior vice president and division manager of First Data Global Information and Analytics Solutions, which publishes SpendTrend. “Consumers definitely responded to the early openings and discount prices on Black Friday. We continued to see strong momentum through Cyber Monday.”

One possible reason for the increase in the amount spent is that the value of the prices offered by retailers dropped this year, the report said. Overall, prices from retailers slipped 0.9 percent on a year-over-year basis, with the most significant deals being offered by stores specializing in big box electronics and appliances, or general merchandise, which includes discount retailers like Walmart and Target.

Statistics have shown that lower prices during the holiday season typically induces consumers to spend less on their debit cards and more often on their credit cards, which may make it easier to finance gift purchases, particularly if shoppers don’t have the cash on hand to afford all the bargains they want to take advantage of.

During the holiday shopping season, there tends to be increases in rates of credit card delinquency as consumers find it more difficult to afford fitting all the gifts they want to purchase for friends and family into their budgets. But this is only a seasonal change, as delinquency rates tend to drop again within a few months of the start of the new year.

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