There’s no debate about the impact historic inflation rates are having on American consumers. In the 12 months ending in June 2022, the cost of goods and services soared 9.1%. These price hikes are putting extreme pressure on consumers, especially families preparing for the new school year.
According to a new survey on back-to-school shopping conducted by Bankrate, 41 percent of back-to-school shoppers say inflation will change their shopping habits for the upcoming school year, and of this group, an astounding 95 percent are looking for savings strategies.
Are you ready to create a back-to-school shopping plan that works for you? Find out what others are doing and how you can best manage your upcoming expenses.
Middle-income families brace for biggest changes
While nearly everyone in the U.S. is feeling the financial strain, middle-income consumers are the most likely to adjust their back-to-school purchases, with 53 percent of households with annual incomes between $50,000 and $99,999 saying they will change their spending due to inflation, compared to 39 percent of high-income households (those earning more than $100,000 a year) and 37 percent of low-income households (those earning less than $50,000 a year).
Middle-income households are also more likely to use money-saving tactics such as buying more second-hand or thrifted items (28% vs. 21% of low-income and 23% of high-income households), extending current products for another year (32% vs. 28% of low-income and high-income households), and looking for more coupons, discounts and sales (50% vs. 46% of low-income and 43% of high-income households).
Shoppers want savings
If you’re like most Americans, school shopping is a big buying event: Families with children in elementary through high school plan to spend an average of $864 on school supplies this year, according to an annual survey by the National Retail Federation.
Trying to cover these costs is putting a huge financial strain on American families already struggling to pay high household bills: According to a Bankrate survey, 31% of back-to-school shoppers expect these purchases to strain their budget, and 26% feel they will be forced to spend more than they can afford.
Such financial stress is not surprising given the rising costs consumers are facing: According to a February 2022 Bankrate survey, 93% of Americans have experienced price increases in the past year, and nearly three in four (73%) are concerned about new or continuing increases in the prices of daily necessities in the next 12 months.
Thankfully, there are practical ways to save money: According to a Bankrate survey, inflation-conscious back-to-school shoppers are planning actions to offset rising costs.
- 54% plan to use coupons, discounts and sales more.
- 45% plan to buy less school items (school supplies, clothing, etc.);
- 43% plan to buy the cheaper brand.
- 39% of people plan to keep using the items they currently own for another year.
- 37% plan to shop at stores where they have a loyalty account or a store-specific credit card.
- 30% plan to buy second-hand or recycled products.
- 25% plan to use credit card points to offset the cost.
- 21% plan to postpone their purchase.
- 4% plan to adopt other cost-cutting techniques.
“I think all of the savings strategies mentioned in our survey are worth considering,” says Ted Rothman, senior industry analyst at Bankrate. “I especially like to look for opportunities to stack discounts — for example, combining credit card rewards with store coupons or online shopping portals. This represents three ways you can save money on the same purchase.”
How consumers are financing back-to-school
So how will shoppers pay for their purchases? Of those planning to do their back-to-school shopping this year, more than half (57%) will pay with a debit card, followed by cash (47%) and credit card (46%). Less common payment methods include pay later (14%) and check (9%).
Credit card users have different plans for paying for back-to-school purchases: 30% plan to pay in full on statement date, and 21% plan to pay in installments over multiple billing cycles.
But with inflation raging, it’s important to keep debt to a minimum. Credit card balances are on the rise as people try to make up for financial shortfalls. The Federal Reserve Bank of New York’s August 2022 Household Debt and Credit Report shows that credit card balances have increased 13% year over year, the largest increase in the past 20 years. Credit card interest rates are also rising, so fees incurred when carrying over credit card balances to the next month may increase rather than reduce financial stress.
Paying off credit card bills in full and making other purchases with cash is a good way to avoid interest, but the survey found that only 33% of back-to-school shoppers plan to set aside money specifically for these purchases.
Use the right credit card for your back-to-school purchases
In addition to prudent spending strategies, back-to-school shoppers can cut costs and avoid costly credit card debt by using the right payment products.
Rewards credit cards are a great tool. You can use a cash-back card to save money while paying for back-to-school expenses, then use the cash you save to pay bills and buy other necessities. Credit cards that offer rewards in points are also convenient. Most issuers allow cardholders to redeem their points for cash or gift cards. If they have a shopping portal, you can redeem your rewards for merchandise.
Applying for a new credit card can also help. Look for one that offers a big sign-up bonus. The best ones can give you hundreds of dollars in cash or points to spend on shopping, helping you to spend less.
Another option is a 0 percent introductory APR credit card. These are the best products if you need to pay off your back-to-school expenses over time. The best 0 percent introductory APR offers give you more than a year to pay off your balance with no additional finance charges. Make sure you pay off your balance in full before your regular rate goes into effect.
Conclusion
No one knows when inflation will ease and costs will fall or stabilize. While you can’t control the prices of consumer goods, you can control how you buy and pay for back-to-school items. Use a spending strategy that makes sense for you and your family. Whenever possible, pay off consumer debt before interest accrues, and use credit cards to work for you, not against you.
Methodology
Bankrate.com commissioned the survey from YouGov Plc. All figures are from YouGov Plc unless otherwise noted. The total sample size was 2,438 people, of which 729 plan to go back-to-school shopping. Fieldwork was conducted from July 13-15, 2022. The survey was conducted online and met rigorous quality standards. We employed a non-probability-based sample with pre-quota at the time of collection, then employed a proven weighting scheme on the back-end designed to provide nationally representative results.
