Holiday shopping brings together people who want to save money and stores that want to keep the once-mighty dollar. As always, this economic game has winners and losers. From a business point of view, the winners are the stores that met or beat their sales goals. From the consumer's point of view, the winners are those of us who didn't spend more than we planned or go over our holiday shopping budget. Of course, you need to know how much you can spend on holiday shopping before you can tell if you've won that game.
On the business side, the loser is the store that didn't meet its sales goals. The ones who lose the most are the small, locally owned shops that aren't backed by a big company. This group needs to find ways to pay for the extra hours their employees have worked and the extra stock they have. This could mean that you have to borrow money. Which, of course, means that the bottom line goes down even more because the company has to pay more interest.
Another bad thing that can happen is that these small retailers can no longer get a quick loan or get more credit from their suppliers. They might "bail them out" with business credit cards. This is a huge risk, because interest rates on credit cards are usually high and can go up at any time if the bank wants them to. If a business uses credit cards to pay for some of its operations, it is setting itself up for a cycle of debt. This is always a bad idea.
As for consumers, those who spend too much on holiday gifts are the ones who lose. People who use their credit cards too much and don't pay them off right away are the ones who lose the most. Even if you pay a little more than the minimum each month, interest and fees could make it take months or even years to pay off just one holiday season's worth of purchases. And in less than 11 months, we do it all over again.
What about those people who didn't spend more than they could afford during the holidays? Did they succeed? Well, they are the winners if they paid with cash, checks, or credit cards. But if their spending plan was based on the fact that they could buy things on credit and pay a small amount each month, then they are also losers in this game. Interest on debts that were built up during the holiday gift-giving season can easily ruin a person's budget. Most people don't think about how much interest they pay on each purchase, and banks won't help you figure it out. Too many people don't pay much attention to the finance charge on their monthly statement. Just a part of life or something they have to pay for that they can't avoid. We can also pay that off in small amounts each month. Plus more interest.
