Recent study indicated a drop in credit card usage - Other News


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Credit Card Applications » News » Other » Recent study indicated a drop in credit card usage

Recent study indicated a drop in credit card usage

Recent study indicated a drop in credit card usage

According to the study conducted by Javelin Strategy and Research, consumers are not using credit cards as much they used to in the past. As per the results of a survey conducted in November 2009, 56% of the consumers have admitted to using the card in the last month which is down from 87% during the same period in 2007. This 56% has been the lowest since the start of the survey conducted by Javelin in its series of annual surveys since the last six years. The figures according to Javelin were expected to drop to approximately 45% during this year’s survey.

Javelin’s president and founder, James Van Dyke, has said that the decline is a calculated move by the consumers, where they have consciously moved away from credit cards and have opted for other alternative modes of payment, such as debit cards, as well as reloadable prepaid cards. The speeding up also seems to have happened due to the weak economy.

As of such, the usage of credit cards had gone down; due to the recent recession the drop in usage is more noticeable. This trend seems to be more prevalent among the card users in the 18-24 age groups according to Javelin, where they seem to prefer much more real-time and immediate payment options. The credit card usage in general, seems to be more prevalent in the higher-income groups, where they prefer to use their cards more in order to obtain rewards while paying off their balances regularly every month. The logic here seems to be that the more a person earns, the less likely they will give up using the card.

The usage patterns according to Javelin seem to have positive implications on customers, as issuers may try to spur the usage of credit cards due bearing in mind the new regulations with debit cards. The positive side to this would be that issuers will now try other new strategies such as rewards, lower fees, reduced rates etc., to readjust their strategies to attract customers to spend more while using the credit card.

As per the survey done by Javelin, the results are not actually comparable with the purchase volume data because the results are actually based on consumer feedback with regard to their purchase patterns. Around 4,000 customers were asked about their recent usage and different payment options.

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