Credit Cards Stayed in Pocketbooks Last Weekend

Credit card use was, compared to 2008, way down during this year’s so-called “Black Friday” weekend, the traditional kick-off to seasonal shopping. According to research commissioned by Reuters, only 26 percent of people out buying over the period said they’d used a credit card.

Thirty-five percent of those interviewed said they’d used debit cards to make purchases. But the biggest single group, which comprised 39 percent of respondents, told researchers that they’d stuck with cash.

Britt Beemer, who founded the company that carried out the survey, America’s Research Group, told Reuters: “That’s an amazing shift in consumer’s habits.”

The findings fit in with earlier research by the National Retail Federation (NRF) that asked consumers how they intended to pay.

Credit Cards Still Useful Online

What remains unknown is the impact that online shopping may have on credit card use. Traditional shoppers spend Black Friday weekend (the one after Thanksgiving) in the nation’s malls. But another group of consumers waits for the following Monday (which retailers have dubbed “Cyber Monday”) to begin their buying.

In a press release issued the day before Cyber Monday 2009, the NRF reported a survey that says:

• 96.5 million Americans plan to shop on Cyber Monday this year, up from 85 million in 2008
• 87.1 percent of online retailers have a special promotion for Cyber Monday, up from 83.7 percent last year
• 91.5 percent of Cyber Monday shoppers–or 88.2 million Americans–plan to shop from home
• 13.5 percent, or 13 million people, plan to shop from work on Cyber Monday
• 69 million Americans have said they plan to shop from work at some point during the holiday season

And none of those consumers can use cash online. So the credit card trends begun on Black Friday weekend may just alter when the holiday season’s online shoppers join in the buying frenzy.

Credit Card Debt, and Delinquencies Down

But it’s not just credit card use in stores that’s down. Research from TransUnion, a company that specializes in credit and information management, reports that–at $5,612–average credit card debt in the third quarter of 2009 was slightly lower than the previous quarter’s figure and for the same period in 2008. Although the change was less than two percent, it suggests a new wariness to this form of borrowing on the part of card holders.

TransUnion also found that delinquencies were down in the last quarter compared to the previous one–this time by nearly six percent. In a statement, Ezra Becker, who is TransUnion’s director of consulting and strategy for financial services, attributed this in part to new credit card regulation. He said:

For the first time in ten years, third quarter national delinquency rates showed a decrease from the previous quarter, indicating a departure from the usual seasonal patterns. This movement could have occurred for a number of reasons. First, the national savings rate fell in the third quarter, possibly indicating continued consumer efforts to keep debt to a minimum and debt repayment under control in the face of an already depressed labor market… Second, many lending institutions modified credit card rules, fees and charges in the third quarter, in advance of the Credit CARD Act taking effect in February 2010. Those changes almost certainly impacted the dynamics of third quarter performance.

Published 11/30/09 (Modified 04/23/12)