Jan 07, 2014 Quinn Thomas
The past months were strong for retailers as consumers spent money on gifts for friends and family. According to the MasterCard SpendingPulse U.S. retail holiday shopping season report, sales were up 2.3 percent year-over-year.
"The holiday shopping results are in line with expectations, but several factors impacted retail sales this year," said Sarah Quinlan, senior vice president of Market Insights for MasterCard Advisors, which produces the monthly SpendingPulse report. "Having six fewer shopping days between Thanksgiving and Christmas, as well as bad weather in some parts of the country for the final two weekends of the season clearly had an effect on sales. Yet holiday sales were a clear improvement over last year's weaker numbers."
The jewelry category was the strongest, with apparel showing some growth as well. Luxury and electronics didn't show too much growth but eCommerce sales increased on a year-over-year basis by double-digits.
Heightened levels of consumer spending may not be over with the holidays, as people could hit the mall and shopping centers to purchase products with cash and gift cards they received as gifts from friends and family.
This spending likely brought a lot of joy to people across the United States, however, consumers may have set themselves up for financial failure in the near future.
Short term lending demand may rise
One of the biggest concerns consumers should have after spending a lot of money is unexpected expenses. If a person's car breaks down after a shopping spree, it may be difficult to stay current on bills and cover the costs of the repair. As a result, people could face costly late fees and penalties that may put their bank accounts in jeopardy.
This type of situation doesn't have to occur if consumers have the wherewithal to take advantage of short term lending. These financial institutions may want to increase marketing following the holidays to target people who could be in a tough financial situation.
Consumers may be skeptical about short term loans due to recent negative press. Critics claim that this type of financing comes with high fees and interest rates. But these costs are often less than what is charged in late fees and penalties on credit cards and other bills, so short term lenders need to make this information available to potential customers.