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Cash is king this Christmas as consumers turn away from the modern December ritual of a massive credit-card-fuelled shopping spree.

With visions of falling house prices and a plummeting stock market dancing in their heads, Canadians are rediscovering the virtues of thrift, if only out of necessity.

Linda Third is one of those who are doing without debt this Christmas, saying she's less likely to use her credit cards. "It just feels like we're more in control of the holiday," she said, taking a pause from perusing Vancouver's Robson Street shopping district.

Besides, she says, racking up a big credit-card bill would horrify her parents, who grew up during the Depression.

Retail consultancy Maritz Research Canada is projecting that shoppers will slash their gift-giving budget by 14 per cent this year, down to $571 from last year's average of $663. Maritz and others project that Canadians will shirk from using credit cards. A Maritz survey indicates that seven in 10 Canadians plan to pay for their purchases either using cash in hand, or tapping their bank accounts with debit cards. Those who plan on using credit cards, already in the minority, are falling in number. Last year, just over a third of Canadians said they would use credit cards; this year, only 29 per cent plan to do so.

Rob Daniel, managing director of Maritz, said he believes the pervasive coverage of the credit crisis in the financial markets, coupled with the gloomy economic outlook, has driven home the message to consumers - debt is risky. "The message is out there right now that you want to be careful about credit," he said.

Another factor: Those most likely to use store credit cards, which saw the steepest decline, are most typically higher-risk borrowers, in part because of lower incomes. Such consumers may be paring back expenditures because of economic woes, Mr. Daniel said.

This Christmas is the toughest retail environment in at least six years, and perhaps since 1990, the last time that a struggling economy deflated holiday shopping budgets. Eighteen years ago, the recession permanently altered holiday shopping, as retailers abandoned the after-Christmas sale, and started slashing prices before Dec. 25.

This year, it looks as if economic pain is again transforming shopping, with the spread of the 24-hour store. Wal-Mart started the practice at some stores four years ago. This month, 192 of its 256 stores outside Quebec (which bans such extended hours) will be open around the clock. The Bay and Zellers are ramping up their 24-hour operations in Ontario. Such steps are part of the retail industry's effort to deal with "unprecedented uncertainty," said John Torella, senior partner at J. C. Williams Group in Toronto.

But for some consumers, even aggressive measures aren't enough to spark a spending spree. For Lisa Pequegnat in Toronto, extended hours at the Bay won't entice her to the mall in the middle of the night. If the whole mall were open, it would be a different story, she said. Either way, she'd be paying with cash. "I don't want to have to pay later, and I don't want to deal with interest."

With a report from Amanda Truscott in Toronto

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2008 holiday shopping

Canadians are using cash and debit cards to buy gifts this holiday instead of credit cards.

HOW ARE CANADIAN PAYING?

Cash: 29%

Debit card(s): 41%

Major credit card(s): 27%

Store credit card(s): 2%

Other: 1%

HOW ARE THEY SHOPPING?

At the store: 88%

Through a catalogue: 3%

Online: 8%

Other: 1%

TOP TEN GIFT CATEGORIES

Percentage of shoppers choosing

Entertainment: 57%

Electronics: 43%

Toys: 41%

Gift certificates: 39%

Health, beauty, personal care products: 37%

Apparel: 35%

Candies/chocolates: 29%

Beer/wine/spirits: 26%

Children's apparel: 25%

Hobbies/specialty goods: 24%

TOP TEN STORE CHOICES

Percentage of shopping at store

Wal-Mart: 66%

Canadian Tire: 51%

Zellers: 40%

Future Shop: 35%

Sears Canada: 33%

Chapters/Indigo: 28%

Shoppers Drug Mart: 25%

Best Buy: 29%

The Bay: 17%

Winners: 16%

SOURCE: MARITZ RESEARCH