Credit Card Spending Declines: Which Card Features Matter to Consumers and Additional Strategies to Stem the Revenue Hemorrhage

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)