People feeling more confident about economy, credit card spending jumps
“People were definitely wanting to spend more and just excited to give gifts,”
CHARLOTTE, N.C. (WBTV) - Consumer spending is on a rebound as more people are buying goods.
A key sign was people putting more on their credit cards during the holiday season of 2021.
During the fourth quarter of 2021, credit card spending jumped by 20 percent for American Express card members.
This number is good and bad because it shows the economy is recovering, but bad in the sense that people are choosing to carry more debt.
“People were definitely wanting to spend more and just excited to give gifts,” said Lily Sanford, owner of Lilbelle in Charlotte.
That’s the change Lilbelle saw in 2021 during the fourth quarter, a time when holiday shopping rebounded.
In 2020, people spent $131 in her store on a single visit, but that increased in 2021.
“It’s about $140 during Q4. That being said, it can be higher in other quarters when people are spending for themselves. We see a trend after Black Friday. Customers really want to just spend for other people,” said Sanford. “It’s people who are wanting to spend money because they want new things to wear because they have places to go. But then on top of that, they’re carrying within that 2020 mindset of like we really want to support local, and we want to see you succeed.”
Dr. Steven Cox, a professor of Marketing at Queens University of Charlotte said, “well, I think people are feeling more comfortable with the economy they’re feeling more comfortable with their ability to have a job, be able to go back to work.”
Along with people feeling comfortable about the economy, the professor added others are buying things out of fear of it running out or increasing prices because of inflation and supply chain issues.
“There’s a lot of pent-up demand during COVID because of uncertainty because people weren’t going out. That demand is showing itself in increased purchases. Also, the increase in purchases are not getting in, in terms of the credit card companies are not getting a much faster 19-year 2019 number,” said Cox.
Cox believes spending will continue to go up in 2022 if we don’t see another COVID variant that disrupts the country and economy.
Improve Credit says before adding more debt to your credit card, sit down with your partner or the person in charge of your finances first, and map out a plan.
Wanda Strickfaden, owner of Improve Credit said “Figure out a budget, give yourself an actual financial limit of what they can and cannot spend within that month on their credit card debt. I always tell my consumers that if you can’t pay your balance off in full then don’t borrow.”
Strickfaden understands some people had to rely on their credit cards because of the pandemic to pay off regular bills, medical bills, and everyday living.
“I understand that some have no control of being able to borrow from their credit cards because of those situations. So, in place of that, I always say tell your creditors to help you with a hardship program. So that if you are financially struggling to pay your credit card balances, you could take advantage of those hardships to give you some relief within your financial situation at that time,” said Strickfaden.
Improve Credit tells WBTV that it does offer free evaluations for people who need help with their credit report or credit scores.
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