U.S. Consumers Report That Credit Cards Now Their Most Preferred Payment Type in Stores

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Mercator Advisory Group survey finds that U.S. consumers prefer to use credit cards online and in stores.

One of the 38 exhibits in this report

Credit cards rewards and online shopping appear to be driving use of general purpose network branded credit cards, especially since 3 in 10 credit cardholders say they use premium credit cards that have an annual fee. Consumers recognize the security that credit cards offer particularly online.

The most recent Insight Summary Report from Mercator Advisory Group’s biannual CustomerMonitor Survey Series, titled U.S. Consumers and Credit: Rising Usage, reveals that 62% of U.S. households use credit cards in 2018, up from 60% of U.S. households in 2017. Rising use of online shopping appears to make credit cards more attractive, as the survey also finds that U.S. consumers are now more likely to prefer using credit cards rather than debit cards or any other payment type at online retailers, for online travel, digital content, and even online bill payments than since we started tracking usage preference in 2015.

Debit cards, however, are often preferred for small purchases and everyday in-store spending such as groceries. But when consumers were asked to choose their single most preferred payment type in stores, 36% prefer credit cards and 33% prefer debit, the top two payment types, followed by 18% who prefer using cash. Surprisingly, the preference for cash remains strong, particularly among Gen Z young adults aged 18 to 24 who, since the CARD Act of 2009, are less likely than older adults to use credit cards. This study also finds that consumers using credit cards are more likely than ever to be paying their monthly balances in full, though young adults are less likely than average to do so.

The report presents the findings from Mercator Advisory Group’s CustomerMonitor Survey Series online panel of 3,002 U.S. adult consumers surveyed in June 2018. The study examines the demographic distribution of credit card use in the United States, use of co-branded credit or charge card programs by type, changing patterns of credit card use relative to other payment types, credit card payment habits, and self-assessed credit history, as well as notice of and reaction to merchant steering practices, usage of peer-to-peer lenders by brand and reasons for use, consumer experience of changing fees, APRs, motivators to increase credit card borrowing and credit card spending, methods used to shop for new credit cards, application channels used for general purpose credit cards and store credit cards, and consumers’ notice of and reaction to merchant rules for credit card use and interest in mobile-based account controls.

“In 2018, credit cards rewards and online shopping appear to be driving stronger use of general purpose network branded credit cards, especially since 3 in 10 credit cardholders say they use premium credit cards that have an annual fee. Consumers recognize the security that credit cards offer particularly online. When it comes to fraud and disputed charges, it’s easier to deal with when the money is borrowed from the issuer, and not their own,” stated Karen Augustine, manager of Primary Data Services, including CustomerMonitor Survey Series, at Mercator Advisory Group, the author of the report.

Highlights of this report include:

  • Year-over-year trending of penetration of credit cards in the U.S. market, cardholder behavior, and changes to features, credit limits, APRs, applications, and turn-downs
  • Number of credit cards used in the past year and those who pay an annual fee
  • Usage of co-branded credit cards by type
  • Most important features of credit cards and selection criteria
  • Participation in credit cards rewards program, most valued rewards, and estimated value of credit card rewards
  • Shifts in the channels that consumers used most recently to apply for general purpose and store credit cards
  • General purpose reward card participation, type of rewards available, most valuable reward type
  • Considered applying for new credit cards and most valuable methods of shopping
  • Consumer perception and expected reaction to merchant policies and practices restricting credit card use or steering customers to other payment forms
  • Interest in mobile-based account controls for use by cardholders to limit fraud on their accounts by card type, awareness and use of card controls for credit vs. debit
  • Typical payment habits and use of automatic payments
  • Usage of peer-to-peer lenders by brand and reasons for use

The report is 83 pages long and contains 38 exhibits.

Companies mentioned in this report include: Acima Credit, Affirm, Avant, Bread, Klarna, Lending Club, Prosper, SoFi, and Upstart.

Members of Mercator Advisory Group CustomerMonitor Survey Series Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits.

Please visit us online at http://www.mercatoradvisorygroup.com.

For more information and media inquiries, please call Mercator Advisory Group's main line: 1-781-419-1700 or send email to media(at)mercatoradvisorygroup.com.

For free industry news, opinions, research, company information, and more, visit us at http://www.PaymentsJournal.com.

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About Mercator Advisory Group
Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.

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Karen Yetter
@MercatorAdvisor
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