Growth rates at the two bank card associations again climbed well into double digits in the second quarter as consumers showed no sign of letting up on their credit habit.
Visa U.S.A. said its consumer payment volume jumped 28.5% in the second quarter, to $69.7 billion. It was the eighth consecutive quarter in which the growth exceeded 20%, and Visa continued to gain market share against MasterCard.
MasterCard International, which was growing faster than Visa during the cobranding boom in 1992 and 1993, reported Monday that its U.S. credit and debit card payment volume grew 17.5% in the second quarter, to $48.7 billion.
Visa U.S.A. was up 33% in the first quarter to MasterCard's 22%.
The rapid growth continues at a time when consumers are borrowing more and paying back less. A recent analysis by PaineWebber Inc. found that national consumer debt levels, led by increases in installment borrowings, are approaching peak levels. Debt payments as a percentage of income have stabilized.
While total consumer debt as a percentage of disposable income is rising, people's ability to manage debt is also improving, said Carl Pascarella, president of Visa U.S.A.
Even so, he said, consumer debt trends need to be watched. "It's certainly something we want to keep looking at - delinquencies and chargeoffs absolute and as a percentage of volume."
With more credit and debit cards in their wallets, consumers are feeling more in control of their payment options and therefore are less likely to become overextended, said Daniel T. Murray, senior vice president of MasterCard's credit products group.
"Consumers are looking at the convenience factor," he said. "We see cards as a payment mechanism for convenience."
In fact, the card associations have found that convenience is the main reason for growth. Cards are being used at supermarkets, gas stations, doctors' offices, and theaters.
The goal is to replace cash and checks, which account for some 80% of all payments. "That's where the opportunity is," Mr. Murray said.
Visa tracks this by measuring card usage against personal consumption expenditures. In the last six quarters, Visa's personal consumption expenditure share moved 1.6%, Mr. Pascarella said, or about $90 billion.
The number of Visa credit and debit cards in the United States rose 22.4% in the second quarter, to 227.8 million. MasterCard's U.S. region saw 18.4% growth in cards, to 159.3 million.
Both associations reported explosive gold card growth. Visa Gold volume rose 45.3%, to $35.4 billion, while Gold MasterCard jumped 31%, to $18.9 billion.
