While this trend of decreasing credit card usage has been ongoing for several years, analysts have presumed that this was due to consumers’ desire to be more fiscally conservative in the wake of changes to key economic drivers like rising unemployment, falling house prices and rising inflation. The consensus was that when the economy improves and consumers regain confidence, the appetite to borrow money would grow and consumers would return to use credit cards as before.
Megan Bramlette, director of knowledge management at ACG, says: “Consumers today are seeking control of their finances and have become financially conservative. We believe that this shift in behaviour is a true social change – one that will permeate society long after our economy recovers.” Bramlette goes on to say, “The results of this study indicate this thriftiness will result in consumers ceasing to use their credit cards. As a result, consumer usage of debit cards is likely to grow in terms of market share and volume for the next 2-3 years unless credit card issuers begin offering very compelling products to their customers in an effort to recruit them back from debit card usage.”
Matt Simester, Managing Director of ACG adds that, “There is a window of opportunity for credit card issuers to remind card users of the fundamental benefits of using credit cards and to build products that reflect the need for financial conservativeness. While I expect card usage in the premium credit card market to be maintained because of strong reward programmes, issuers need to invest in solid value for money propositions and educate the consumers about the benefits of credit cards.”
