Creditnet News Story
Consumers prefer cash to credit when making small purchases
Wednesday, January 25, 2012
By Danielle Robson
While consumers are using their credit cards more often these days as the economy continues to improve, cash is still being used more often when it comes to making smaller, everyday purchases.
A recent study by Javelin Strategy and Research found that 79 percent of consumers had used cash in the previous seven days to make a purchase, according to a report from the Huffington Post. That's compared with 65 percent altogether who used either their credit or debit cards. However, analysts expect that this trend is going to shift toward greater credit card use overall in the coming year, even as cash is still used for more affordable transactions.
What is most likely to suffer is debit card use, the report said. Uncertainty about the future of how banks will charge for use of these cards, and the accounts associated with them, might dissuade some customers from using them with the same regularity as they did during and following the recession.
"We will see consumers convert [back] to cash for smaller transactions and credit card use will increase this year," David Albertazzi, a senior research analyst with the financial services research firm the Aite Groupe, told the site.
In addition, prepaid cards are expected to continue growing in popularity, the report said. They're already the fastest-growing payment type in the nation, and now many banks are issuing them as a means of generating revenues lost to heavier federal regulation.
Credit card use has certainly increased in recent months, with balances growing considerably as the end of 2011 approached. While some say this was normal seasonal spending, others argue that it indicates a slow return to pre-recession spending habits.
| 
Subscribe | |
