Cash is king this holiday season

About 71.5% of consumers will use cash, checks or debit cards this holiday season versus 28.3% who plan to use credit cards, which is about a 10% decrease from last year and a clear sign that consumers are weaning themselves away from credit cards.

As credit card interest rates climb along with credit card delinquency consumers clearly want to avoid digging an even deeper credit hole.

According to the National Retail Federation's 2009 Holiday Consumer Intentions and Actions Survey, U.S. consumers plan to spend an average of $682.74 on holiday-related shopping, a 3.2% drop from last year's $705.01. Only 28.3% of shoppers will use credit this year compared to 31.5% a year ago.

"Paying with cash is the best way to add a safety brake during holiday shopping. Studies show that consumers typically spend 12% to 18% less when we use cash for payment. Counting out and handing over cash is a sobering reminder of how much items really cost. It makes you pause and consider if the purchase is really worth your labor," Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook, told me by e-mail.The federation's survey findings were confirmed by the USAA survey. More than half (55%) of respondents are planning to avoid charging their holiday purchases and 85% plan to use cash for some of their holiday purchases. Among the shoppers who plan to use their credit cards, 74% plan to pay off their balance immediately so that they do not pay interest. About 20% say they will pay off the balance in a few months while 7% say they will only pay the minimum balance.

But the USAA survey found many consumers have not prepared a plan for holiday spending. About 19% are not sure how they will pay for their holiday purchases and 22% who plan to use cash haven't saved any money in advance. So consumers may be hoping to use cash, but not able to swing it.

"Now is the time to budget and plan for your holiday shopping so you don't get caught up in the moment and spend more than you can afford," says Hardekopf. "Credit cards rates are now too high to just charge something and assume you will be able to pay it.

"If you charge $1,000 on a credit card with an interest rate of 15% and just pay $25 of your balance each month, it will take you until May of 2014 to pay off this Christmas, and you will pay an additional $370 in interest. If your APR was recently increased and you carry a balance, leave that card at home so you won't charge anything more on it," Hardekopf advises.

Millions of Americans are still paying off the holiday purchases they made last year. About 6% of adults -- or about 13.5 million Americans -- were still carrying debt from last year's holiday season. In households with children under 12, 10% were still carrying debt, according to a Consumer Reports Holiday Shopping Poll released in October.

Follow the lead of most consumers and plan your holiday shopping budget based on the cash you have to spend. Don't dig a deeper hole during the holiday shopping season.

Lita Epstein has written more than 25 books including "The Complete Idiot's Guide to Improving Your Credit Score."