MasterCard has published new analysis of industry data that shows a trend reversal — consumers shifting their spending from debit and prepaid cards toward credit cards.
From 2008 to 2012, U.S. credit card volume grew by 14.4 percent, or $280.4 billion, primarily from re-energized consumer spending, MasterCard finds in its report: Road to Recovery: The Cautious Rise of the U.S. Consumer.
During this four-year, post-crisis period, about $141 billion of spending shifted from credit to debit, primarily in the early years of the financial crisis.
In that same four-year period, U.S. debit volume grew by 44.0 percent, or $603.5 billion, as a result of general spending growth and a shift from credit cards and cash.
But in recent years the trend has reversed, with spending flowing from debit to credit.
In 2012, U.S. debit and prepaid card volume grew $129 billion, or 7.0 percent, on the back of strong spending growth of $137 billion, compared to the previous year. Meanwhile, credit card volume that same year grew by 8.4 percent, or $172 billion.
The reasons for the shift?
MasterCard cites two major factors:
- Consumer confidence has shown significant improvements as anxieties about financial situations and ability to pay bills have decreased since the start of the crisis.
- Rewards continue to be an important feature/function driver for credit card spending as consumers look for more value from their payments products.