subject: Paper Or Plastic: A Look At Consumer Credit Card Use [print this page] Have you ever thought about how your customers use credit cards? Do they charge every purchase from the morning coffee to monthly car payments? Do they only use credit cards in certain situations such as for buying clothes, but not for buying groceries? Or, if your customers each hold multiple credit cards, do they use one for large purchases and others for smaller day-to-day items?
The way people use credit cards can reveal a lot about their lifestyles and financial outlooks. According to a recent survey from Compete.com, most credit card holders use a mix of payment options and payment preferences vary appreciably by demographic. For many consumers, credit card use is not as ubiquitous as you might initially expect yet it is still a highly popular payment option, along with debit cards. If your business does not accept credit cards or debit cards, you may be missing out on sales from people who dislike using cash or checks, or who use their card for everything in order to earn reward points.
The survey revealed that nearly half of credit card holders use their card fewer than three times per month, preferring to use it primarily for more expensive purchases. One third of consumers will use their credit cards as often as 1-6 times per week. For less expensive purchases, such as personal items, dining out, or groceries, credit card and debit card use is almost equally balanced.
Credit cards are slightly more popular than cash when paying for entertainment expenses but, when it comes to small daily purchases like a cup of coffee, cash remains the preferred form of payment. However, there are still many consumers who prefer to use credit for all of their purchases. Notably, checks are not a highly favored form of payment in any expense category.
More than three-quarters of credit card holders (81%) also carry a debit card. The groups most likely to favor debit card use include women, younger people, and those with household incomes under $60,000 per year. It may be that debit card use gives these consumers a greater sense of control over their finances, since funds are taken directly from their bank accounts. Debit card use may also help them avoid potential late payments, interest accrual or other fees that are often associated with credit card use.
For consumers who hold more than one credit card, there are usually two cards that they favor. How do most people decide which card to use for a purchase? The majority of people say they will use a credit card based on specific deals or rewards offered, such as frequent flyer miles. Many people report that they will use one credit card for most purchases, and switch to an alternate card if the preferred card is not accepted or not functioning.
With nearly 6 million credit cards in circulation in the United States (nearly 2 credit cards for every man, women, and child in the country), credit is not only a widely used form of payment but one that stands to grow in popularity. Regardless of what business you are in, you can increase sales and better serve your customers by accommodating their preferences for multiple payment options.
About the Author
Debbie King is a freelance writer who has written on a wide array of topics, with special expertise in the healthcare, accounting and finance, hospitality, and manufacturing industries. She currently resides in the suburbs of Philadelphia.
