51% of Shoppers Cutting Back on Black Friday This Year — What To Do With the Money You Save
Soaring inflation in 2022 has convinced more than half of U.S. consumers to spend less this Black Friday compared to last year, according to a new survey from consumer research platform Attest. Those who do plan to spend less will focus on paying bills or building up their savings.
The survey of 1,000 working-age U.S. consumers found that 51% of respondents plan to cut back on purchases during the upcoming Black Friday, which falls on Nov. 25. Nearly four in 10 (38%) of those who plan to spend less will use it to cover day-to-day expenses. About one-third will save money, while 10% will use it to pay for home energy bills.
Average spending is projected to dip to a range of $101 to $300 for many consumers this year, down from $300 to $500 during Black Friday 2021. Clothing is expected to surpass tech products as the most sought-after items in 2022.
“Inflation’s impact is hard to ignore from our research,” Attest Founder and CEO Jeremy King said in a press release. “This drive to save dollars extends into the holidays beyond Black Friday too, with seven in ten Americans changing their holiday gifting habits this year.”
What should consumers do with additional savings from spending less on Black Friday? Many financial experts advise setting money aside for emergency savings. A good rule of thumb is to save between $1,000 and $2,000 in cash to cover temporary lodging, fuel, food, water and necessary medications in the event of an emergency.
If you already have emergency cash savings built up and want to put your Black Friday savings to good use, the smart move right now is to seek the safety of savings accounts and bonds. These are low-risk assets that can provide financial security in a period of high inflation, economic uncertainty, stock market volatility and rising interest rates.
Online savings accounts are a good option because you can earn better-than-average annual percentage yields. Consumer Reports recommends checking the minimum deposit requirements, fees and other features such as ATM access and check writing to find the best fit. Also, review the account’s APY history to see how long the current rate has been offered. If the APY has been around for a few years, it’s probably not a temporary teaser rate.
Some high-yield savings accounts at traditional banks offer the same perks as online accounts, but with the added advantage of having access to physical branches.
Money market accounts typically offer higher rates than traditional savings accounts, according to Santander Bank. Like savings accounts, money market accounts are FDIC-insured and usually limited to six free transfers or withdrawals per service period. Most also have minimum balance and initial deposit requirements and transaction fees, Time reported.
You can find even higher rates with certificates of deposit, though you might have to buy long-term CDs of seven to 10 years to get the highest rates. If you cash them out early, you’ll face a penalty.
If you can hold out even longer to access your money, consider putting it in Treasury bills. You can get a higher return than with savings accounts, and T-bills are backed by the full faith and credit of the U.S. government. The minimum purchase is $100, but you can also buy them at a discount and get the full price when they mature.
Series EE and Series I bonds work like T-bills in that you’ll earn interest at a fixed rate over a period of many years. Rates are usually higher than with most savings accounts, but you will sacrifice instant liquidity.
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