Aug 22, 2022

JD Power Study Finds Decline in Credit Card Spending

Aug 22, 2022 | Banks, Market

By: Ken Chase.

In its most recent U.S. Credit Card Satisfaction Study, J.D. Power found that the overall share of U.S. consumer credit card spending declined significantly. In a press release announcing the release of the study, the company cited consumer financial stress and a move to buy now, pay later and other alternative payment options as factors impacting the decline.

According to J.D. Power banking and payments intelligence director John Cabell, uncertain economic conditions throughout the pandemic and subsequent slowdown have led to the decreased use of credit cards:

“Despite recent spikes in travel and spending, cardholders generally have been taking a more cautious stance with credit card spend in the past five years. They are increasingly turning to other channels such as debit cards, BNPL and even cash. It is going to become critically important for card issuers to improve product value and boost proactive support for a growing segment of financially stressed customers as we move into this next phase of the economic cycle.”

The study found that overall credit card spending share dropped from 47 percent in 2021 to just 42 percent today. That decline has been a constant throughout the pandemic, according to most estimates. In 2019, credit card spending accounted for roughly 50 percent of consumer monthly spending.

The report also notes a rise in the number of credit card customers who can be classified as “financially unhealthy,” with 57 percent of U.S. credit card users now falling into that category. Unsurprisingly, 22 percent of surveyed consumers reported that their financial situations are worse than they were in 2021.

The Power study revealed that buy now pay later options are being considered by an increasing number of credit card users, especially for large purchases. Other alternative options of interest include personal loans and flexible financing programs. Some 44 percent of credit card users report that they are open to BNPL and other alternative payment arrangements.

The good news for credit card issuers is that consumer satisfaction with their credit cards is apparently on the rise, even as inflation and a weakened economy have helped to slow credit-based spending. The top-ranked providers included American Express, Discover, and Bank of America, in that order.

Learn more 

First Citizens to Buy Silicon Valley Bank

First Citizens to Buy Silicon Valley Bank

North Carolina-based regional bank First Citizens has agreed to purchase Silicon Valley Bank, according to a March 26 statement from the Federal Deposit Insurance Corporation (FDIC). The FDCI confirmed that it had agreed to the deal, which will see the regulatory...

PacWest Moves to Boost Liquidity

PacWest Moves to Boost Liquidity

Regional bank Pac West Bancorp has secured a $1.4 billion line of credit from an Atlas SP Partners finance facility as part of its effort to boost liquidity, after customers withdrew roughly 20% of their deposits in the first few months of 2023. According to a...

UBS to Buy Credit Suisse in Emergency Rescue

UBS to Buy Credit Suisse in Emergency Rescue

UBS reached an agreement to purchase embattled Credit Suisse on Sunday for a reported $3.2 billion. The agreement came after weekend negotiations orchestrated by the Swiss National Bank and Swiss regulators, which pushed for the emergency rescue as a way to shore up...