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After holiday splurge taste for spending returns

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney) -- After some disciplined belt-tightening, shoppers who enjoyed a tasty splurgefest over the holidays seem ready to buy more than just T-shirts and socks in 2011.

MasterCard Worldwide found that 61% of shoppers surveyed in mid-December said they don't plan to cut back on spending in 2011, even after their holiday bills come due.

For nearly two years, households have hunkered down through the economic slump, training themselves to shop only for basic necessities like groceries and basic clothing.

That may be changing. Americans now seem to be feeling an urge to splurge.

"What we saw from consumers during the holidays was a lift in spirits," said Melody Miller, senior vice president of global commerce development with MasterCard Worldwide.

"People were buying not just practical things, but were also injecting some fun into their shopping," she said.

Most surprisingly, many consumers showed that they are were comfortable making pricier purchases. Evidence of this emerged this month when high-end stores such as Nordstrom (JWN, Fortune 500) and Saks (SKS) posted a surge in their store sales for December, possibly even stealing sales away from other retailers.

The MasterCard survey showed that 59% of consumers with incomes between $35,000 and $50,000 don't plan to cut back spending in the New Year while 57% of consumers making between $50,000 and $75,000 said the same.

Among the more affluent spenders -- those earning between $100,000 and $150,000 -- the number who said they're ready to make a few fickle purchases this year jumped to 73%.

Despite this, consumers are still budget conscious. More than half of those polled said they will scout for more sales as well this year.

The MasterCard-Harris Interactive survey polled 1,019 shoppers aged 18 or older.

Credit, debit or cash? In 2011, consumers will be using their credit cards a little differently, said Theodore Iacobuzio, vice president of global insights with MasterCard Worldwide.

"Pre-crisis, credit cards were used as wish fulfillment devices even when the spending on the cards didn't make sense from a household budget point of view," he said.

Then the economy slumped. Card issuers pulled back on their offers and many consumers on tight budgets were forced to rein in their usage of credit, opting for debit card or actual cash payments instead.

"Consumers will use credit cards this year to make longer-term and larger-ticker purchases instead of their day-to-day buys," said Iacobuzio.

An example: Right after Christmas if your garage guy says you need new tires during your car inspection, that $500 isn't a discretionary expense. But it is an expense that consumers are ready to put on their credit card, said Iacobuzio.

Or when your washing machine breaks down and you need another one, consumers are likely to use the credit card for that purchase, he said.

Overall, Iacobuzio said credit card use for discretionary spending will likely pick up this year among affluent households.  To top of page

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