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CU System
Consumers avoid risk credit card use at all-time low
SAN FRANCISCO (9/16/10)--Credit card use is declining as more consumers are opting for “pay now” alternatives like cash, checks, debit and prepaid cards, according to a recent study. However, credit card use among credit union members seems steady. Credit card use among consumers dropped 31% between 2007 and 2009. If the rate of decline continues, credit card use will drop below 50%, said Javelin Strategy and Research. It also found that among the 11% of consumers who claim they have an increased ability to put funds into savings, 46% have decreased credit card use, and 51% have cut their spending on goods like entertainment, travel, luxury items and cars. At credit unions, outstanding card balances were $31 billion as of December 2007 and $35.5 billion in December 2009. The most recent data, for June 2010, shows that balances were $35.1 billion at credit unions, according to the Credit Union National Association (CUNA). Credit union credit card outstandings increased annually from 12.2% as of June 2006 to June 2007, and 6% from June 2009 to June 2010. CUNA noted that although there has been a slight decrease in credit cards outstanding at credit unions the past six months, that is typical for the first half of any year. Members tend to pay bank loans and save more during that period. “The recent passage of widespread financial reform targeting payment cards is not just impacting the way consumers behave, but is transforming the entire payments landscape,” said Beth Robertson, director of payments research at Javelin. “The industry now has an imperative to innovate, finding new payment options or structural alternatives that will drive revenue.”
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