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The changing face of credit card use

by Peter Andrew
The changing face of credit card use

Yesterday, this blog dug deep into a new research report from comScore Inc. to reveal how consumers value different product features when they’re shopping for new plastic. Today, we’ll use the same document to explore continuing changes in credit card use.

Credit card use evolving

In 1990, U.S. credit card transactions had a total value of about $800 million, according to Nilson Report figures quoted in a Columbia Law School study. The same source says that that figure had risen to approximately $1.7 trillion by 2006. According to Richard Barrington, writing for the Index Credit Cards website, credit card trasactions reached $1.9 trillion in 2010.

This progression has not, however, been as smooth as the numbers may suggest. Many people turned away from credit cards during and after the credit crunch and recession, and some still prefer to use cash or debit cards. The comScore report says:

“While indicators show consumers are starting to feel more positive about the economy; those with less optimism remain wary of card usage, and in many cases are turning to alternate payment methods. [In December 2010,] 65 percent of those who believe the economy to be in poor condition report having changed their method of payment due to economic concerns (down 4 percent from 2009). Similar to previous year’s results, among those who report having made such a change, we still see a large percentage moving towards either cash and/or debit cards.”

Credit card trends show consumer resistance

The comScore report shows how resilient these negative credit card trends are, in spite of the recovery. When asked about their preferred payment methods, 51 percent of cardholders who believe that the economy is in poor shape said in 2010 that they would be more likely to use cash, up from 46 percent in 2009. Thirty-eight percent said they’d be more likely to use a debit card, down from 39 percent in 2009. And only 18 percent said that they’d be more likely to use a credit card, down from 21 percent in 2009.

Credit card companies not panicking

The executives who run credit card companies must find these sorts of data worrying, but other figures in the comScore report mean they can relax a little. In December, researchers asked consumers with one or more credit cards about their preferred method of payment across seven categories of purchases, credit cards were still the most popular in five (travel, business expenses, gas and automotive, merchandise and entertainment).

Thirty-six percent of respondents said that debit cards were their preferred method of paying for groceries, but that was only very slightly ahead of those who preferred credit cards (34 percent). Only 18 percent preferred to pay in cash, and 5 percent by check. In drugstores, credit cards and debit cards were neck-and-neck at 33 percent.

We�re not yet done with the comScore report, and later this week this blog will use it when taking a look at credit card rewards programs.

Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.

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