Gift-giving is a ‘go’ for most Canadians leading up to Black Friday according to a recent survey* by Equifax Canada, with 58 per cent of survey respondents saying they will spend about the same as last year and four per cent saying they will spend more on holiday gifts this year. Only 33 per cent said they will spend less.
While most people will proceed with their holiday shopping plans, the way in which they shop and celebrate may look and feel different this year owing to the pandemic. More holiday shoppers (65 per cent) are likely to shop online this year and 48 per cent of those surveyed say COVID-19 has impacted their holiday shopping plans. Furthermore, 56 per cent indicated that they will not visit with extended family this holiday season; the number climbs to 60 per cent for consumers 55+.
“Despite COVID-19, there’s still a good level of optimism when it comes to preparing for the holidays,” said Rebecca Oakes, Equifax Canada’s AVP of Advanced Analytics. “On the bright side it looks like most people still plan on buying presents, even if they’re staying away from extended family to protect them this holiday season. However, it’s important to take stock of your finances and prepare a realistic budget to avoid any unpleasant bills in the New Year.”
Credit Cards And Debt
Overall credit card utilization remained low with a 10 per cent year-over-year drop in both Q2 and Q3 when compared to the same time period in 2019. However, consumer spending which saw a big drop in April and May is back up to pre-COVID levels in Q3.
Some highlights of the survey results with respect to credit cards, spending and debt:
- 61 per cent say they use their credit card more often than cash for purchases
- 54 per cent prepare a budget for holiday shopping
- 33 per cent indicated that it takes a month or more to catch up on paying for holiday purchases
- 33 per cent have a lot of anxiety about their current level of personal debt
- 19 per cent regret their holiday purchases once receiving their credit card bill
To avoid post-holiday credit card hangover, the Financial Consumer Agency of Canada (FCAC) is encouraging Canadians to take some time to focus on their personal finances. With November being Financial Literacy Month in Canada, now is the time to start planning for the holiday season spending. FCAC recommends making a budget and assessing your financial situation to determine what you can afford. With the challenges and uncertainty caused by the COVID-19 pandemic, it is especially important to make informed financial decisions. FCAC’s free Budget Planner is a great place to start.
Impact of COVID-19
When asked about the impact of COVID-19 on their financial situation, the survey revealed:
- 31 per cent agree their job feels less secure because of COVID-19
- 68 per cent say they have delayed at least one major purchase since the pandemic began
- 59 per cent delayed a vacation
- 25 per cent delayed home improvement
- 22 per cent delayed a car purchase
- 19 per cent delayed the purchase of a new home
“While nobody likes to delay a major purchase, the data from our survey supports the fact that most people continue to be responsible with their debt obligations,” said Oakes. “Taking on too much debt during times of financial uncertainty can be stressful. It’s good to be optimistic, but it’s very important to plan for major purchases. Checking your credit reports is a good place to start to make sure everything is correct, which can serve you well when seeking a loan.”
About six-in-ten Canadians are viewing the financial impact of COVID-19 in a more positive way, with nearly half (45%) saying they expect their household finances to stabilize in the next six months. The positive outlook continues with 58 per cent saying they are spending more time outdoors and 57 per cent embracing a healthier lifestyle.
To learn more about how credit works, consumers are encouraged to visit Equifax Canada’s education hub. The site offers insights on how different actions may impact their credit scores and provides resources to help improve their financial literacy.
*An online survey of 1,539 Canadians was completed between September 11-13, 2020, using Leger’s online panel. The margin of error for this study was +/-2.5%, 19 times out of 20.