• by Jack Loechner , Staff Writer @mp_research, April 1, 2010

The U.S. Census Bureau reports that there were 159 million credit card holders in the United States in 2000, 173 million in 2006, and that number is projected to grow to 181 million Americans by 2010. However, revolving consumer credit, which mostly consists of credit card debt, fell 2.3% in January 2010.

Retailer Daily reports that this drop may be seen as good news for credit card issuers, as it moderated a trend of severe revolving credit declines that included drops of 12.9%, 18.5% and 13.3% in the three preceding months.

According to a survey by Compete, written by Shadbuli Purav, the study of over 1,300 credit card holders, found that while credit card usage appears to be frequent and common, credit cards are still not the primary mode of payment.

Nearly half of credit card owners use a credit card fewer than three times a month, and only 16% of credit card owners use a credit card more than seven times a week.

Frequency of Credit Card Usage (% of Respondent Credit Card Owners)
Frequency of Use	% of Responders
Less than once a month	19%
1-3 times a month	28
1-5 times a month	37
7+ times a month	16
Source: Compete, March 2010

Comparing debit cards with credit cards, the report says that in many cases, debit cards are used to introduce people to the concept of using a card instead of cash. But the study found that 81% of credit card owners also own debit cards, a substitute product. Ownership of debit cards among credit card owners, however, is skewed towards certain demographics, such as towards women and a younger demographic. However, those with a household income of less than $60,000 are less likely to own a debit card.

Percent of Credit Card Holders Also Owning  Debit Card
Group	% Owning Debit Card
Gender
Female	83%
Male	75%
Age
18-34	86
35-54	79
55+	66
HH Income
< $60K	74
60-99K	85
$100K+	81
Source: Compete, March 2010

The report notes that credit cards are generally used for travel and other more expensive, but less frequent, purchases. For less expensive products and services such as groceries or eating out, all three modes (credit, debit and cash) seem to be commonly used. However, debit cards seem to be more commonly used for such expenses as compared to cash. For smaller expenses like buying a coffee or for going to a movie, however, credit card holders still prefer to use cash.

Payment Mode for Expenses (% of Respondents)
Expense	% of Respondents
	Credit Card	Debit Card	Cash	Check
Travel expenses	81%	14%	4%	1%
Expensive purchases	77	12	6	4
Personal items	46	37	13	3
Eating/Dining out	44	36	23	-
Grocery expenses	38	45	13	4
Entertainment	37	29	34	-
Small daily expenses	15	19	64	2
Source: Compete, March 2010

The report concludes that, although widely distributed, credit cards are still not the primary mode of payment and credit card issuers should target increasing the usage of each credit card instead of focusing on increasing number of credit card holders

For additional information from Compete, please visit here.