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Increased holiday credit card usage leads to January sales letdown

Jan 24, 2012 Philip Burgess

With the holiday shopping season over, consumers have only one thing on their minds: Clearance. Reuters reports that shoppers felt more confident about their finances over the past few months than they have since pre-recession years, choosing to make more expensive credit decisions and splurge. Specifically, credit card usage was up 25 percent compared to last year. This has led to one of the slowest Januarys for retailers in recent memory. As holiday credit card bills reach homes, consumers are likely to cut back spending over the next few months. "The first and second quarters this year will see a deeper low than last year," retail consultant Jan Kniffen told the news source. "Sales in the week after Christmas were so strong that took a bite from January." As a result, many businesses are selling off old merchandise at 50 to 75 percent off to make way for spring items. The Consumerist points out that the one saving grace for retailers may be the redemption of gift cards received during the holidays - although February may be more difficult since there will be no "fresh incentive to shop."