Credit Cardholders Spending Less And Weighing Rewards

Two-thirds of U.S. consumers have cut their credit card spending, closed a credit card account or switched credit card brands in response to changes within the last year in their credit cards’ terms and conditions, according to a new report comScore Inc. released this week. And some 60% of respondents said they would switch cards for a better rewards deal. ComScore in October conducted an online survey of more than 2,000 U.S. Internet users, comparing some of its latest findings with a similar survey conducted a year earlier. Some 66% of respondents said that because of economic conditions they are cutting their spending back from a year ago. Some 42% said economic conditions are making them more likely to use cash this year for routine purchases compared with 50% who said so last year. Some 40% said they are more likely to use a debit card for purchases, up from 34%, while 23% said they are more likely to use a credit card this year, up from 18%. Economic pressure and new credit card-industry regulations forced changes in many cardholders’ accounts this year, ComScore notes. Among respondents who noted credit card-account changes within the past year, 54% said their terms and conditions changed; 53% said their interest rate increased, 26% said their credit limit shrank, and 21% noticed new fees. Some 17% said their rewards programs had changed, 14% were hit by higher annual fees, and 10% said issuers closed their accounts. Some 55% said they are spending less with their credit cards following recent changes, while 27% said they no longer use the affected card, 12% said they closed the account, and 9% said they applied for a new card with a different issuer. Some 60% of respondents said they would consider switching to a new credit card to get a lower interest rate, while 59% would switch to get better rewards, and 15% would switch to get better customer service elsewhere. Eighty-three percent of those seeking better rewards would switch to a new credit card to receive cash-back rewards, while 41% would switch to get merchant rewards, 33% would switch for a flexible-rewards program, 30% would switch for gasoline rewards, 20% would switch for air-travel rewards, and 4% would switch to earn charitable-donation rewards. “Card issuers that can provide additional value to consumers while complying with changing credit card regulations may encourage customers to continue spending on their credit cards,” ComScore concluded.