Consumer spending increased leading up to holiday season

With the holiday season right around the corner, it should come as no surprise that consumers are spending more money. As people purchase gifts for friends and family, expenditures should pick up in the coming months as well.

In October, dollar volume growth was 6.8 percent, compared to 5.3 percent growth in September, according to First Data Corp's SpendTrend analysis. The strongest growth was for food services and drinking places as well as leisure, Meanwhile, retail sales experienced a strong pickup as well, rising 5.6 percent, compared to 3.6 percent in the previous month.

"Consumer spending growth gained momentum in October, which should provide retailers with an optimistic outlook heading into the holiday season," said Krish Mantripragada, SVP, information and analytics solutions, First Data. "Retailers should expect holiday spending to be modestly stronger compared to last year barring any number of external events that could negatively impact sales such as poor weather or geopolitical events at home or abroad."

Short term lending demand may rise following the holidays
As consumers spend money on holiday gifts and get togethers, they may not consider the future implications. Stretching a budget too far during this time of year could lead to financial troubles in the near future.

For example, if an unexpected expense arises in January or February, such as a trip to the emergency room, the out-of-pocket expenses could force people to fall short on certain essentials. Short term lending could prove beneficial in this type of situation, as it enables consumers to secure funds fast to ensure that no bill payments are missed.

However, many people may avoid this type of financing due to negative press. In recent months, short term lending has come under fire, as critics claimed the high fees and interest rates charged take advantage of consumers. But, it is important that people consider the whole picture when determining whether or not short term lending could be beneficial.

When an unexpected expense presents itself, consumers may miss a payment on certain expenses, potentially leading to costly late fees and penalties. Before ruling out a short term loan, it is important to consider the total of these fees and what would be charged to obtain a loan.