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.