American Consumers Plan to Use Less Credit on Holiday Gifts This
Year Compared to Last Year, According to the Cambridge Consumer
Credit Index

ISLANDIA, N.Y., Dec. 7 /PRNewswire/ -- 28% of Americans plan to use less credit than a year ago to buy holiday gifts, down sharply from 38% who planned to reduce credit usage in 2003, according to the Cambridge Consumer Credit Index. 38% of consumers say they will pay for holiday gifts with cash or checks, up from 29% who did not use credit cards for gifts in 2003.

The Cambridge Consumer Credit Index also asked consumers who plan to use credit cards this holiday season whether they expect to pay them off in full or revolve balances when the bills arrive in January. 61% say they expect pay off their balances in full, up slightly from 60% in 2003. 33% expect to carry a balance on the credit cards for more than a month, down from 36% a year ago. 6% plan to pay off some cards and carry balances on others, up from 4% a year ago.

"The results of the Cambridge Consumer Index wildcard question show that most consumers are feeling more confident about spending on gifts this holiday season. Far fewer Americans plan to use less debt than a year ago, and many more have enough cash to pay for gifts without using credit at all. Fewer Americans than a year ago will take more than a month to pay off their credit card balances. Overall, the consumer is in much healthier financial shape than they were in 2003," says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

These findings are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse.

The overall Cambridge Consumer Credit Index rose by one point in December to 63. The Index rose on the question of taking on debt in the next month, but remain unchanged in past month and next six months questions.  The "Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, narrowed by 2 percentage points from November to 7 points. A month ago, 76% of Americans planned to pay off debt, while a month later only 69% actually did so.

"Especially during the holiday season, consumers should be cautious not to overspend to avoid the added stress of having to pay off high credit card bills. A consumer should prepare a realistic budget to curb holiday spending temptations.  With reasonable planning, consumers may have an enjoyable holiday season without the worry of having to pay off high interest bills for months and months to come," says Chris Viale, Acting President & C.E.O. of Cambridge Credit Counseling Corp.

In conjunction with the Index, the Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason that they found it necessary to get help with their debts now. Of the 375 people who answered, this was the order of their responses:

1. I am frustrated with high bank rates and fees (36.4%)

2. My income has been reduced from a lower salary, less overtime or layoff
    (25.1%)

3. I want to improve my ability to achieve future financial goals like
    buying a house or saving for retirement (13.9%)     

4. I got into too much debt by overspending (8.1%)    

5. Other (6.4%)    

6. My lack of financial education caused me to take on too much debt (3.5%)

7. Large medical expenses forced me to take on huge debts (3.5%)

8. Recently divorced or widowed (3.2%)  

For more information on the survey see http://www.cambridgeconsumerindex.com/index.asp?content=client_survey

These findings of the Cambridge Consumer Credit Index are the result of monthly nationwide telephone poll of 800+ adults conducted by International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse. The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board's G19 release of consumer credit outstanding data.    

For more information contact Paramjit Mahli at mailto:pmahli@cambridgeconsumerindex.com or 631-786-6450 or the Index website at http://www.cambridgeconsumerindex.com/.  

SOURCE Cambridge Consumer Credit Index Web Site: http://www.cambridgeconsumerindex.com