A recent Bank of America survey reveals that 62% of consumers are preparing for financial stress related to vacation expenses. Mary Hines Droesch, product manager for Consumer Banking and Lending, Business and Wealth Management at Bank of America, joined TheStreet to discuss her best tips for tackling this holiday season without breaking the bank.
Related: How to Avoid Credit Card Debt This Holiday Shopping Season
Full video transcript below:
CONWAY GITTENS: 62% of Americans anticipate financial stress around vacation expenses. So what are your best tips for budgeting smart and avoiding overspending or making unnecessary purchases?
MARY HINES DROESCH: Yes. And in that survey we asked them where they feel the tension. Also 59% said they would make the most of their money by shopping at discount stores. So take advantage of the deals, but go to department stores, discount stores that can really help your money go further. And that's why Cyber Monday is the day and Black Friday are the days that our consumers say they're going to spend more to get those deals. You should also use a rewards credit card, as it will allow you to receive a reward for your poem, which you can use to then pay for some of your vacation expenses after the fact. In fact, our survey said that 40% of the customers we surveyed plan to use rewards to offset their purchases. That's why at Bank of America we have a personalized cash rewards card where you can earn 3% back on select categories that you can choose from. Online shopping is one of them. So it's a great way to get the most out of your money.
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CONWAY GITTENS: So take me back to that 62% because I always like to have some kind of comparison. Is that better than previous years? Is that worse than previous years?
MARY HINES DROESCH: Yes, well, 62% seems high because Christmas shopping generates stress in the consumer, but it is a lower figure than last year's 67%. So we've seen some areas of goods and things start to go down from an inflation perspective. That is a relief for the consumer. But it's still high. 62% feel the stress of Christmas shopping.
CONWAY GITTENS: Talk to me about the importance of making a budget before you go shopping or sit down to shop.
MARY HINES DROESCH: Yes, absolutely. Because it is very easy to make impulse purchases and then spend much more than planned. So we recommend that you allocate 50% of your income to your needs, 30% to spend on those things that are discretionary and 20% to savings. Now, recognizing the holiday season, it can be difficult to meet those ratios, so maybe save a little less during the holiday season. And once you've defined how much you can spend, make that list. And remember, there are offers that you should take advantage of. Always use your rewards credit card so you can earn reward points on purchases or that you can use for other things. And then remember that too. Well-thought-out, homemade gifts don't cost much, but they can actually be even more meaningful than purchased gifts.
