BMO economist predicts merrier holiday $hopping season
TORONTO, Nov. 27 /CNW/ - Fast on the heels of Black Friday - the biggest shopping day of the year in the U.S. - Canadian retailers will be launching massive sales to help kick-start the shopping season in Canada. BMO Economics predicts more cheer this holiday season as the weight of poor economic conditions last year seems to be lifting from consumers' minds.
"Canadian consumers should be in a far merrier mood to spend this holiday season, cheered up by an improving economic climate, record low interest rates and some pent-up demand after a Grinch-like recession stole Christmas last year," said Sal Guatieri, Senior Economist, BMO Capital Markets. "However, with joblessness still relatively high, Santa's bag won't exactly be brimming with toys and goodies, at least not until next year's holiday season when the economy should be firing on all cylinders."
Nancy Marescotti, Director, Card Marketing, BMO Bank of Montreal, expects the lingering consumer restraint to evidence itself not just in how much consumers spend but how and where they spend their Holiday dollars as well.
"We may continue to see a bit of restraint in consumer spending this holiday season but I think shoppers are looking forward to celebrating, albeit modestly, that they've survived a very difficult economic challenge. In fact, customers have told us they intend to maintain many of the strategies that helped them get through the recession - taking advantage of sales and discounts and using rewards programs to stretch their dollars, for example."
To help shoppers make sense of their money, avoid overspending and save more this holiday season, Ms. Marescotti offered the following tips:
- Set a Budget and Stick to It - Santa had the right idea. Make a list,
check it twice and know your limits. Write down a list of gifts you
want to buy during the holidays that fit within your budget. Create
your plan early in the season before you get caught up in the
excitement of buying gifts. This will help you avoid the impulse
purchase and keep track of your spending.
- Set your Clock - Don't wait until the last minute to do your
shopping. You're more likely to overpay for items and you run the
risk of not finding what you're looking for. Comparison shop and look
for store sales to ensure you're getting the best price.
- Supplement your Spend - Look to loyalty programs with robust reward
portfolios - such as the AIR MILES Reward Program - and redeem for
gifts such as gift cards to supplement holiday spending.
- Just Say No - Don't pay for an extended warranty you probably don't
need. Many credit cards have features such as extended manufacturer
warranties or protection against loss or theft so that you won't get
caught holding an empty stocking.
- Stretch Your Dollars - Get the most out of your purchases this
holiday season by using a credit card attached to a loyalty rewards
program. Look for a program that lets you earn rewards from purchases
at multiple retail locations in addition to what you earn from using
your credit card. Programs such as AIR MILES accelerate your rewards
earnings by allowing you to double dip, essentially earning rewards
twice on the same purchase.
- Buy Online - avoid the crowds and stick to the items on your list.
For AIR MILES Collectors consider www.airmilesshops.ca. Pay close
attention to shipping dates and build in extra delivery time so you
won't be disappointed.
- Pay Your Balance in Full - Ideally, you should always pay your credit
card balance in full by the due date to avoid interest charges. If
you do expect to carry a balance, minimize your overall costs by
using a low-interest credit card such as the BMO Preferred Rate
MasterCard, which offers a 17.5 per cent annual interest rate and
comes with no annual fee. Or you can transfer your balances to a
low-interest line of credit. BMO also offers a low interest rate
option on its suite of MasterCard products - an ongoing rate of 11.9
per cent (not a short term promo rate) for a low annual fee of $35.
And you can combine this low rate option with a rewards program -
something that most other credit cards do not provide.
- Use One Credit Card For Your Holiday Shopping - If you're going to
use a credit card to pay for your holiday purchases, stick to one
card so that you only have to reconcile one credit card bill in
January - that's a lot less hassle and makes it easier to track
And if you're a rewards collector, consolidating your purchases
within a single rewards program will help get you to your goal
faster. The money you spend can help you earn rewards to redeem for
next year's gifts or a trip for the family.
"We all know it's easy to overspend when we want to buy that perfect gift. But, holiday joy can quickly become a holiday hangover when bills arrive in January," said Ms. Marescotti.
"The best way to avoid post-holiday statement shock is to develop a realistic spending plan. Make a list of who you're buying for, how much you want to spend, then create a budget and stick to it. Create your plan early in the season before you get too caught up in the excitement of buying gifts. Objective planning can make a big difference to your willpower, your bank account and to your peace of mind."
SOURCE BMO Financial Group
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