Preliminary data released by Visa (V.US) and MasterCard (MA.US) on Tuesday shows that US retail sales during the holiday season grew approximately 4% year-over-year, as consumers continued spending on electronics and apparel despite budget constraints.

Visa Chief Economist Wayne Best noted that shoppers are making more rational purchasing decisions, leveraging AI tools for product searches and price comparisons to maximize their disposable budgets. Michelle Meyer, Chief Economist at MasterCard Economics Institute, added that many consumers started holiday shopping earlier and actively utilized promotions to optimize value.

Retailers launched promotions ahead of schedule to secure sales, and transaction data from both payment networks—spanning billions of transactions—indicates sustained spending resilience through December.

Visa reported a 4.2% YoY increase in US retail sales (excluding autos, gasoline, and dining) from November 1 to December 21, slightly below its October forecast of 4.6% growth for the full two-month period. MasterCard’s data, which includes retail and dining, showed a 3.9% YoY rise, exceeding its earlier 3.6% projection. Neither dataset was adjusted for inflation.

Both companies highlighted that early promotions and the convenience of online shopping drove e-commerce growth to outpace in-store sales. However, Visa noted that physical stores still dominate, accounting for 73% of transactions, while online purchases made up 27%.

Electronics led category growth, with Visa reporting a 5.8% YoY surge in sales for TVs, smartphones, and related products. Apparel and accessories followed with a 5.3% increase. MasterCard observed that seasonal discounts and colder weather boosted clothing demand, while jewelry also gained traction this year.