WASHINGTON -- As they prepare to shop for the holidays, consumers plan to cut back on spending, but not much

more than last year. And fewer consumers are worried about their debt.

That's according to the second annual holiday spending survey conducted by the Consumer Federation of America

(CFA) and the Credit Union National Association (CUNA).

This year's survey

of 1,019 consumers was conducted for

the two groups by Opinion Research Corporation International October 25-28.

Over one in four consumers (28%) plan to spend less this holiday season than last year. That compares with

only 13% who plan to increase holiday spending. Still, the majority--57%--plan to spend the same

as last year. That compares to last year's survey findings where 24% planned to spend less, 18% planned

to spend more, and 56% planned to spend the same.

"Given significant declines in consumer confidence and the rise in unemployment, some reduction in holiday

spending plans is not at all surprising. But these results suggest that the contraction in holiday spending may

not be as pronounced as we might have expected." said CUNA Chief Economist Bill Hampel.

Fewer Consumers Worry About Debt

Another surprising finding is that fewer consumers are worried about paying off current and future consumer

debts. Consumer concern about meeting monthly payments on current consumer debts (excluding mortgage debt) fell

from 48% last year to 39% this year. Moreover, concern among those with credit card debt being able to

pay off credit card balances resulting from holiday spending declined significantly ... from 35% last year to

27% this year.

"For the first time in a decade, we have seen a sharp drop in consumer concern about paying off debt," said

Stephen Brobeck, CFA executive director. "Certainly one important reason is that a growing number of Americans

are paying off or managing their consumer debts effectively."

The survey suggests several reasons for this declining concern about consumer debt. In addition to their plans

to cut back spending, consumers plan to finance less of this spending with credit card debt. Only 22% plan to

use a credit card to make "most holiday purchases," down from 26% last year. And fewer consumers are currently carrying credit card debt. Only 38% report that

they are carrying this debt, down from 42% last year.

Declining interest rates also appear to have played a role in lessening consumer concern. Lower rates have

decreased interest obligations, especially on installment debt, and have encouraged refinancing of consumer debt

with mortgage debt. That helps to explain why monthly consumer debt obligations as a percentage of disposable

personal income have risen only from 7.6% in the first quarter of 2000 to 7.8% in the second quarter of

this year.

Young Adults, Families, and the Least Affluent Worry Most About Debt

Some consumers, however, have greater concerns about debt than do others. Young adults, those with low to

moderate incomes, and families tended to express most concern.

Concern with meeting monthly debt payments was highest for young adults aged 18-34 (49%), for low- and

moderate-income households (54%), and for families of three or more persons (47%) compared to 39% for

all consumers.

Concern with paying off credit card debts related to holiday spending was greatest for adults aged 18-34

(37%), for low- and moderate-income households (47%), and for families (34%) compared to 27% for

all consumers.

Finally, given a $5,000 windfall, young adults (25-44 years) and families were most likely to use the funds to

pay off debt. Fifty-four percent of the young adults and 49% of families said they would do so compared to

only 42% of all consumers. (36% of all consumers said they would save the windfall and 17% indicated

they would spend it.)

CUNA and CFA Suggest Holiday Spending Tips

CUNA and CFA continue to caution consumers to avoid getting overextended this holiday season. To reduce credit

card worries, CUNA and CFA suggest the following:

Budget Your Spending: Start with a realistic idea of how much you can spend on holiday gifts, food, travel,

etc. Tally it up, and think hard about whether or not you can afford to spend that much and, especially if that

initial tally makes you uneasy, think about where you might cut back. Then stick to your budget.

Make a List: Work from a list when you shop to avoid impulse purchases that could leave you snowed under in

debt at the end of the season.

Comparison Shop: Fight the urge to get your shopping over with as quickly as possible and take some extra

time to find the best deal.

Trim Your Interest Payments: If you pay with a credit card instead of cash, make sure you use a card with a low interest rate. Now is an especially good time to look for a lower rate since some card rates have dropped more than others this year. Rates from not-for-profit credit unions average about 2.5 percentage points less than bank cards, and usually have lower fees. Also, if you finance some holiday purchases with a credit card, pay down those balances as quickly as possible next year. For a $1,000 balance, the monthly interest charge can be as high as $15.

Open a Christmas Club Account: In January, open a Christmas Club account. Most credit unions and many banks offer them. Put some money in each month based on how much you spent this year. Arrange to have that amount automatically deducted from your paycheck. This way, when it's time to shop for the holidays again, you'll have all the money you need. And you'll earn interest rather than making big interest payments to finance next year's holiday shopping.

Click here to download the Powerpoint presentation.

CUNA is the primary national trade association for the country's 10,000 state and federally chartered credit

unions, which are not-for-profit financial cooperatives serving more than 82 million Americans. CFA is a non-

profit association of more than 260 consumer groups that seek to advance consumer interests through advocacy and

education.