What effect do interest rates falling have on Christmas spending?
Falling interest rates means those people with a mortgage, about 1 in 3 of the population (1/3 rent, 1/3 have no debt), will have more money in their pocket 2012. This is generally good news for retailers but the extra dollars in your pockets from recent interest rate cuts have gone straight into debt reduction and savings rather than going into the stores. Savings have increased 4 fold in Australia in 3 years and credit card debts are dropping and debit cards are booming, so there’s a real shift in spending patterns that indicate Australians are becoming more conservative and more frugal with their extra cash.
Where do you think interest rates will go in 2012?
Interest rates are forecast to fall again by at least a quarter to a half percent by mid 2012. So it’s all good news for those with mortgages or a penchant for spending, let’s hope you save the difference and repay the debt faster.
What does that mean for shoppers over the Christmas period?
Retailers are struggling as people are saving more and repaying debt in the face of tougher economic times brought on by the European economic threats and a slow down in the US. Retailers are bringing forward Christmas sales just like they brought forward the stock take sales in June this year. They are desperate for a sale and they will be hanging up the sale signs early.
Shopping Tips:
1. Set a pre-determined budget based on what you can afford and be modest Kris Kringle for adults
2. Try to delay purchases until the post-Christmas sales
3. Give vouchers so family and friends can benefit from the sales
4. Keep your receipts
5. Don’t use your credit card to spend what you don’t have rather, use a debit card but be careful of debit cards on unsafe websites
6. Use comparison or bargain websites like;
www.shopbot.com.au
www.dealsdirect.com.au
www.oo.com.au
www.getprice.com.au
www.visiondirect.com.au
7. Make sure websites have genuine brand items and have secure payment technology (SSL and Https)
8. Get gift wrapping thrown in where-ever possible
9. Ask for a discount- don’t be afraid to haggle a little
10. Check your financial statements for security reasons and report any inconsistencies
About Sam
Sam Henderson is the CEO and Senior Financial Advisor at Henderson Maxwell - a boutique financial planning firm that specialises in investment and superannuation.
