While banks are trying to determine which brand of card they are going to reissue when the card in your wallet expires, consumers seem to have other matters on their minds. Consumers aren't using their store branded credit cards as much these days. Purchases are still up, but shoppers are focused on paying off their credit card debt, and staying away from the higher-rate store-branded cards. They want to keep it simple, have fewer credit cards, pay lower rates, and maybe even get a free flight out of it.
While the store-branded cards are getting hit the worst, bankcards are also feeling some of the pain. Last year, bankcard balances grew nine percent; three years ago, it was almost 20 percent. Last year, 43 percent of cardholders paid off their balances each billing period!
Economists believe this trend is due to the fact that consumers are taking advantage of the booming economy. Americans are paying off their credit card debts and paying with cash and using their checks, and even debit cards, more.
But, the apparent replacement by debit cards doesn't have the bankcard companies panicking, yet. In fact, Bank One Corp., spokesperson George McCaine, said, "This is very positive for the consumer and for credit card companies. It means the consumer is cleaning up their balance sheet.'' But, they aren't going to take it lying down, either.
What Are They Gonna Do About It?
So, what are card companies doing to get consumers to use their cards? Well, they've instituted a variety of programs from school benefits, to charity donations, to lower rates.
Bank One has lowered rates over the past few years and now offers cards that benefit the cardholder's college or university. Spiegel Inc., has a MasterCard which benefits the fight again breast cancer. Finally, the Target card donates one percent of the cardholder's purchases to his or her school of choice.
But while some companies are jumping through hoops to get consumers to use their credit cards, others in the industry are just waiting for the tide to turn. Many in our industry believe that it's only a matter of time before our economy dips and when it does, consumers will reach for the credit cards and rack up the balances once again.
