Trial Separation – or Permanent Split?

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.