Consumers’ love affair with credit cards is on the rocks.

Besieged by job insecurity and no longer able to overlook climbing interest rates and hefty monthly balances, shoppers are resisting the urge to say “charge” and opting more frequently to either pay via cash or debit card.

Their growing distaste for consumer debt is underscored in the results of a recent study conducted for STORES Magazine by BIGresearch. Overall, consumers indicated they are less likely to use their credit cards more often than they were just 12 months ago. Increased use of credit declined in 14 of 17 specific areas; the other three were flat.

The findings, based on the Consumer Intentions and Actions survey, suggest that consumers are making strides in the quest to reset the spend button and relearn the concept of living within their means.

“There’s a growing body of evidence to support the declining popularity of credit and the rising use of cash,” says Phil Rist, executive vice president of BIGresearch. For instance, while 17 percent of consumers report that they are currently using their credit cards more to pay for gasoline than they were 12 months earlier, “that figure represents a sharp drop from the 25 percent who reported the same in September 2008,” he says. Additionally, when asked about the plastic they now keep in their wallets, “percentages were down for all major credit cards as well as store credit cards.”

Adding insult to injury, when asked about the credit card they used most often for personal expenditures, “22 percent reported ‘I don’t have a credit card,’ up from 16 percent the previous year,” Rist says.

The research reveals that shoppers are relying on debit more than credit for several product categories, particularly groceries and dining out. Forty-six percent use a debit card regularly (as a set pattern); 25 percent use it occasionally.



When it comes to credit, the emphasis is squarely fixed on paying down debt. Just over a third (34 percent) of those surveyed are paying their credit card balances in full each month; 29 percent pay a portion of the balance monthly and 14 percent pay the minimum.

The data is based on feedback from more than 8,500 shoppers who participated in a survey conducted during the first nine days of September, and can be compared to a nearly identical survey conducted during the same period in 2008. Since last year’s survey preceded the worst of the nation’s economic meltdown, it’s a good indicator of how consumers’ perceptions toward credit cards have shifted in its wake.

Shoppers who were knee-deep in conspicuous consumption 18 months ago are beginning to turn over a new, more pragmatic leaf, according to BIGresearch. That outlook dovetails with data released by the Federal Reserve showing that, through August, consumers had reduced their collective credit card debt for the 11th consecutive month.

BIGresearch asked shoppers what method of payment they used most often when making purchases in several categories. The payment options included cash, check, debit, all the major credit cards (American Express, Discover, MasterCard, Visa) and store credit.

Debit cards are the go-to method of payment for routine purchases like groceries, gasoline and medicines/vitamins/supplements. Credit still holds sway for big-tickets items, however: Shoppers are inclined to opt for credit when purchasing electronics, furniture/appliances, jewelry and travel.

When purchasing beauty/cosmetics, 36 percent use debit, 34 percent pay cash and 24 percent use a credit card. When buying clothing and accessories, 34 percent use debit, while 29 percent use credit. Since 2008, there has been an increase of more than 20 percent in the number of shoppers choosing to pay cash in each of these categories.

Thirty-one percent of shoppers are paying for gasoline using credit and 28 percent are reaching for a major credit card when purchasing medicines, vitamins and supplements. Debit is the top choice in each category, however, with 34 percent of gasoline buyers and 37 percent of consumers in need of medicine opting to use a debit card.

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