Note: This is the second in a series.

Consumers may establish a new tradition this holiday season in light of the declining economy with more people reaching for cash instead of credit cards to make their purchases, according to a new study conducted by Javelin Strategy & Research, a financial research firm.

Forty percent of consumers surveyed said they’re pulling out their credit cards less than they were at the beginning of the year.

Dr. Larry Fogelberg, assistant professor of finance at Troy University’s Troy campus, said the phenomenon is directly related to what economists call the “wealth effect.”

“As the stock market continues to decline people tend to spend less because they feel less wealthy and rightly so,” he said. “It is having a pronounced impact on consumer spending. This is the beginning of a huge recession. No one knows where this market is headed. The fear is palpable. I am reading the Wall Street Journal and analysts are wondering where the bottom is.”

The average American household with at least one credit card has nearly $9,200 in credit card debt, according to www.CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time.

Fogelberg said consumers tend to tailor their spending to the status of their stock portfolios, cutting consumption nearly 1 percent for every 1 percent decline in their portfolio, and the end result could mean far less spending this holidays season.

“People are looking at really panning back holiday plans,” he said. “I think the retailers haven’t reported it yet, but we will know a whole lot more after Thanksgiving.”

Fogelberg said one simple alternative to traditional holiday shopping could be just the thing to prevent overspending and loading up credit cards this holiday season.

“We know as economists that if we gave a person the money for the gift we intended to buy, then they would probably find some better use for the money than the gift we had intended to give,” he said. “Money is just so impersonal. It does not seem to invoke the holiday spirit. The way around that is to provide to a charitable organization.”

Fogelberg said that, although consumer spending has declined, donations to charitable organizations have not changed.

“Sending cards in lieu of a meaningless gift is a perfect way to maintain the holiday spirit and reduce holiday spending. “You can even perform a charitable act in that person’s name and notate that act on the card. I feel a lot of people will utilize this type of gift this year. It is a gift that holds a great deal of meaning.”

The attitude of the average consumer has changed in today’s weakened economy, according to Fogelberg, and the purchase of extremely lavish gifts will most likely be taboo.

“People would see typical holiday gifts as not only wasteful, but also silly in this type of market,” he said. “Many people will be looking for new ways to not only how to save money, but also to retain the focus during the holiday season.”

Some shoppers may still feel tempted to reach for their plastic when shopping this holiday season, but a few things should be kept in mind before swiping.

Do not use a credit card to pay for things you consume quickly, such as meals and vacations, if you can’t afford to pay off your monthly bill in full in a month or two. There’s no faster way to fall into debt.

If there is something you really want, but it’s expensive, save for it over a period of weeks or months before charging it so that you can pay the balance when it’s due and avoid interest charges.

Use cash whenever possible. Credit cards should be viewed as a last resort. Paying cash out of pocket evokes a feeling of budgetary constraint and will, in turn, reduce the likelihood of overspending.