Discount shopping: Consumers saving now but won't curb spending for long
We'd all like to think the Great Recession has taught us a lesson about the dangers of overspending. New terms have entered the popular lexicon: "deleveraging" (a fancy word for paying off debt) and "the new frugality." More than two-thirds of those interviewed for the Thrivent Financial/Kiplinger Survey of Family Finances said they had grown more frugal in the past year.
Americans seem to have become disciples of thrift, but we must ask whether the conversion will stick. The gut says no.
Perhaps we'll be more financially responsible and cautious about debt. A recent TransUnion study showed that the average debt per credit card holder was $5,165, down from $5,776 a year ago (though a chunk of that probably represents bad debts charged off by card issuers). Also down: late payments and serious delinquencies on credit cards. The savings rate, once flirting with zero, recently inched up to 3 to 4 percent.
This new frugality probably reflects a desire to bring finances back to an even keel rather than a sea change in behavior.
In their heart of hearts, Americans seem born to spend. Even after a severe recession and, thus far, a fragile recovery, spending picked up in recent months. It's as if consumers are looking for a reason to hit the mall. Richard DeKaser notes that as housing prices stabilized and stock prices recovered over the past year (at least until the latest market turbulence), households recouped some of the wealth that evaporated from 2007 to 2009, bolstering consumer confidence. Economist Ed Yardeni of Yardeni Research has calculated that despite the ailing job market, real compensation per worker (including wages, salaries and benefits per payroll employee) has been hovering at near-record highs -- another potential confidence booster.
And you cannot ignore consumers' hate-love relationship with credit cards -- hate the fees and high interest rates but love the convenience. Credit standards may be tighter, but credit card solicitations are up.
Wired to spend? To top it off, there's evidence we may be preprogrammed to shop. Researchers at Carnegie Mellon University have discovered that the prospect of buying something appealing triggers a response in a part of the brain that's associated with pleasure -- and the prospect of paying a high price triggers a response in a part of the brain that registers pain.
One thing there's no doubt about: Everybody loves a bargain. Surveys show that more consumers are shopping at value-oriented retailers, and they're buying more items on sale. Web sites and apps can help you save.
Find the lowest price. Dealio, which compares prices on 30 million products from 100,000 merchants, has a larger retail search than rival sites offer and provides coupon codes with a thumbs-up or thumbs-down review to show how many users have had success using the coupon.
Pronto.com fetches prices on 70 million products from more than 25,000 online merchants, including eBay. PriceGrabber.com offers prices on products from nearly 13,000 merchants. Both sites send e-mail alerts when your favorite brands or products go on sale.
Shop with Web coupons. RetailMeNot offers coupons from more than 40,000 stores and a community where you can get tips and deal info from others. You also can have the week's most popular coupons e-mailed to you.
CouponWinner.com has more than 24,000 coupons from about 10,000 retailers. Its Coupon Scout tool lets you compare coupons from up to five retailers.