Abstract
Overview
Credit card issuers are dealing with the perfect storm of pressures: industry,
regulatory, competitive, and economic. This Javelin report, the first in a
series, provides an understanding of the trends in consumer credit card
spending, as well as the key behaviors and demographics that characterize
those trends. With this information, credit card issuers will be able to
better configure their portfolio and cardholder relationships for maximized
activation, usage, and in turn profitability. Future Javelin reports will
cover the regulatory pressures, the value of consumers who display trust in
financial services companies, and specific vendor solutions that drive card
issuer competitive advantage.
Primary Questions
- What are the overriding trends in consumer credit card spending?
- How do these trends affect financial institution profitability?
- What are the key product features that drive credit card usage?
- How can FIs leverage the credit card portfolio for enterprise wide
relationship enhancement?
Methodology
This report is based on data collected online from a random-sample panel of
2,339 respondents in September 2008, and 2,957 respondents in September 2007.
The survey targeted respondents based on representative proportions of gender,
age and income compared to the overall U.S. online population. Overall margin
of sampling error is ±2.03% at the 95% confidence level, for 2008, and
± 1.80% at the 95% confidence level for 2007.
Table of Contents
- Overview
- Primary Questions
- Findings and Analysis
- Shift from "Pay Later" to "Pay Now" Hits Institutions Doubly Hard
- Credit Card Transactions Decline as Check Writing Increases
- Focus on Security, Rewards and Premium Debit Products to Stem the Tide of
Increased Check Writing
- Economic Issues Abound: Consumers still Limiting Spending - No Light at
the End of the Tunnel
- Credit Card Usage Shifts Create Less Efficiency and Less Revenue
Opportunity for FIs
- Top of Wallet Card Features - Extending the Product Set beyond Credit
- Leverage the Importance of Security to Spur all Card Usage
- Interest Rates Remain of Paramount Importance for Half of Consumers
- Steep Drop in Online Features as an Extremely Important Feature
- Available Balance Importance to Consumers Expands During Recession
- Rewards Remain High in Importance and are Key to Extending the Enterprise
Relationship
- Grace Period Importance Varies Greatly by Issuer
- Slight Increase in Float time as "Extremely Important" May Help Transform
Portfolios from "Lend" to "Spend"
- Appendix: Additional Consumer Data
- Drop-off in Card Usage across the Board
- Month-over-Month Usage shows Increasing Bent toward Cash
- Higher-Cost, Paper-Intensive Check Usage Rising
- Steep Drop-off in Major Credit Card Used Shows No Signs of Stopping
- Debit Card "Pay Now" Still Increasing
- Store-Branded Cards Rising: Not in Same Boat as Major Credit Cards
- Alternatives Show Increased Usage Month over Month
- Prepaid Gift Card Rise Slowing Month over Month
- Related Research
- Companies Mentioned
Table of Figures
- Figure 1: Payment Methods Used Last 30 Days (Prepaid, Debit Card, Credit
Card, Checks, Cash)
- Figure 2: Payment Methods Used Last 30 Days for Debit Card, Credit Card
and Checks (By Age)
- Figure 3: Consumers' Financial Behavior Changes Due to the Economy
- Figure 4: Credit Card Spend Migrates to Other Payment Forms or Disappears
- Figure 5: Consumer Weighted Average Ranking of Card Attributes
- Figure 6: Security' s Importance in Purchase Decision
- Figure 7: Interest Rate Importance in Consumer Purchase Decision
- Figure 8: Online Features Importance in Consumer Purchase Decision
- Figure 9: Available Balance Importance in Consumer Purchase Decision
- Figure 10: Rewards Importance in the Consumer Card Purchase Decision
- Figure 11: Grace Period Importance in the Consumer Card Purchase Decision
- Figure 12: Float Time Importance in the Consumer Card Purchase Decision
- Figure 13: Used Debit or Credit Card in the Last Month by Financial
Institutions Used the Most
- Figure 14: Cash Used in the Last Year and in the Past Month (2008 vs. 2007)
- Figure 15: Checks Used in the Last Year and in the Past Month (2008 vs.
2007)
- Figure 16: Major Credit Card Used in the Last Year and in the Past Month
(2008 vs. 2007)
- Figure 17: Debit Card Used in the Last Year and in the Past Month (2008
vs. 2007)
- Figure 18: Store-Branded Credit Card Used in the Last Year and in the Past
Month (for 2008 vs. 2007)
- Figure 19: E-Mail Payment Account Used in the Last Year and in the Past
Month (2008 vs. 2007)
- Figure 20: Prepaid (Gift Card) Used in the Last Year and in the Past Month
(2008 vs. 2007)
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