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Credit Card Use Projected To Increase Through 2020

[Monday, July 17th, 2017]

People love to use credit cards, and that doesn’t seem to be changing anytime soon, according to a new report.

Packaged Facts’ recent report, titled U.S. Consumer Payments Outlook Through 2020, shows that consumer credit card payment value grew by over 7% annually from 2012 through 2016. That was more than double the growth rate for market-based personal consumption during the same time period.

Besides credit cards, people also are using debit cards and prepaid cards at a rapid rate, perhaps preferring them to credit because they can use them without fear of going into debt or having to pay back the money later, plus interest. Also, consumers who have trouble getting approved for a general purpose unsecured credit card may prefer to use a prepaid or debit card. Banks that don’t want to risk loaning to these consumers by giving them a credit card can still have these folks’ business, if they issue them a debit or prepaid card rather than a credit card.

The competitive business of credit cards

The report points out that the downside to maintaining a less risky credit card portfolio is is that growing the population of credit card users is difficult. If banks want to keep from taking risks on their credit card portfolios and not give people with limited credit a credit card, then they all have to compete for the same pool of creditworthy, high-spending, affluent consumers.

For the foreseeable future, or at least until 2020, the report predicts that the landscape will only become more competitive, when it comes to capturing credit card users. Active credit card usage penetration is projected to reach 45% in 2020. That translates to 115 million adults who use their credit cards each month.

Online payments are key

Although people may choose to pay for purchases with cash, debit cards, or prepaid cards when they are out and about, when it comes to online shopping, people overwhelmingly choose to pay with their credit cards. So, market growth is anticipated to come from increased usage frequency online.

Using credit cards to make purchases online is often viewed as safer, as customers are protected from fraud by zero liability policies.

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