Credit card usage decline slowing, study shows

Credit card usage decline slowing, study shows

After 11 straight quarters of decline, consumer credit card use continues to fall for restaurants and retailers -- but at a slower pace than in recent months, according to a new study from Capital Access Network.

The Small Business Credit Sales Report (SBCS) commissioned by Capital Access Network, shows that rates of credit card loss are significantly less than they were in 2009. Some restaurants and retailers -- typically older, more established businesses -- are even seeing slight increases in credit card use.

Glenn Goldman, president of Capital Access Network, elaborates on the credit trend in a press release, "Overall, while card sales are still declining, the trends are moderating, and if they continue, we may see card spend growth across all sectors and markets some time in 2011."

Declines are indeed slowing. The most recent data -- through the second quarter of 2010 -- show the rate of decline has fallen to 4.5 percent. In the third quarter of 2009, it fell 14.84 percent.

The SBCS report also showed that possible causes of declining credit include an increased consumer reliance on cash, prepaid cards, and especially PIN-based debit transactions. MasterCard and Visa saw increases in that type of debit transactions at 6.5 percent and 7 percent, respectively. Additionally, both companies reported decreased credit  usage, with Visa showing 7 percent less and MasterCard showing 16.8 percent less in their SEC filings.

Other payment methods have declined as well. Using a signature with a debit card -- as opposed to using a PIN with the card -- fell 5.6 percent in the second quarter of 2010. Still, that decrease is far from the 14.8 percent drop seen in 2009.

Some businesses have made it through better than others. Restaurants only show a credit use decline of 1.21 percent from 2009's numbers, while retail stores are reported as 9.27 percent down from the same time period. It's the first time since 2008 that single digit decreases have been seen.

The report also found that businesses that had been established for 10 to 15 years typically fared better in consumer credit use than those that were new. This was especially true for restaurants. Mr. Goldman said in the same press release that the report "shows that established businesses are demonstrating greater resilience than newer businesses in maintaining year-over-year card sales."

Though restaurants and retailers are still shedding consumer credit usage, it seems that the bottom is no longer falling out.

Published: August 17,2023