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The improving economy may have led more consumers to feel better about their personal finances, but at the same time, many are still displaying some of the caution about credit card spending they learned in the last few years. That trend should continue in the coming months.

Consumers plan to exercise considerable caution where their credit cards are concerned during the holiday shopping season, relying more on cash-on-hand to make purchases, according to a report from the Lowell, Massachusetts-based payment processing company Litle and Co. In all, nearly half of those polled said they had three or more credit cards in their name, but slightly more than that number (53 percent) also said they planned to use either their debit cards or cash to make purchases before turning to credit when it comes to buying gifts. However, about one third of respondents also said they’d rely on credit for purchases of more than $100.

At the same time, many of those who will use credit cards to make purchases for the holidays say the primary reason for doing so is that they can earn benefits from their rewards credit cards when they do. About half of people who have credit cards felt this way, and that includes 73 percent of people who make more than $150,000 per year, concentrated heavily in the Northeast and the West.

“Consumers are carefully choosing between using credit or [debit and cash] and it’s no wonder given the current economic climate,” said Ben Saren, vice president of marketing at Litle. “They are making trade-offs between using their available funds rather than credit to defer payment but are evidently swayed by the chance to earn bonus awards and miles.”

However, merchants should also take note that consumers are still going to rely mainly on real-world and online shopping to make these purchases, and continuing to eschew mobile options, the report said. This is true because while 60 percent of consumers have either a tablet or smartphone, only 25 percent of them have used such a device to make a purchase. And about 63 percent of those transactions had values of between $20 and $100.

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Generally, overspending during the holidays is a problem for many consumers, as evidenced by the upticks in both delinquency and default typically seen around the start of the new year.

Image: paalia, via Flickr

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