Credit Card Providers Innovate As Consumer Attitudes Change

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From Editor’s Desk : This is a guest article by Mike Brains

In these times of austerity and high inflation, the average consumer has had to cut back in many areas, including the use of credit cards. Card interest rates are at a 10-year high as providers battle to protect margins amidst defaults and write-offs and people are more debt-averse than ever before.

In such a harsh climate it’s no surprise that overall use of credit cards has decreased according research by Mintel. Their survey of over 1000 adults has revealed that more people than ever before are avoiding large balances on their credit cards by clearing debts as soon as possible. Gone are the days of cheap credit and less than perfect financial management, the modern credit card holder is responsible and conscious of debt commitments.

The Mintel research revealed that almost two thirds of credit card holders are clearing their outstanding balance on a monthly basis. Even more remarkable, almost a fifth of all participants said they have tried to reduce their credit card usage in the previous two years.

With such attitudes towards credit card use, it’s more difficult than ever for providers to encourage customers to use their plastic to pay for goods and services. Credit card lenders have a number of methods to try and stimulate customers, the main ones being rewards schemes and incentives. These have been the main focus of the major providers for the last few years and continue to be used to try and increase transaction levels. Other product areas targeted to increase card use include competitive interest rates, balance transfer offers and 0% deals. These have all been scarce in the market since the economic downturn began but are slowly returning with the aim of pulling in new business. Possibly one of the most interesting new developments in the credit card industry, and one likely to get consumers excited, is the introduction of contact less payment. In a world where most people are time-poor, a service where an account holder can either swipe her card or phone to pay is surely a big selling point.

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