Consumer Payment Card News

Convenience Users

American Express released results from its ‘Everyday Spending Index’ yesterday that shows 70% of American consumers routinely pay their credit or charge cards bills each month and that 33% of consumers use plastic more frequently today then five years ago. Convenience was cited as the number one reason for using cards more frequently. Other reasons cited for increased card usage reward programs (61%); greater spending flexibility (59%); less check writing (56%), ability to float until the next cycle (54%); preference to not carry cash (50%) and better spending management (45%). AmEx says its survey shows the average American spends up to $20,000 each year on typical household and recurring expenses.

According to the American Express ‘Everyday Spending’ Index, consumers welcome the option of using plastic to pay for common, everyday expenses. According to the study, 33% of consumers report using plastic more frequently today than five years ago.

Citing convenience as the number one reason for using credit cards more frequently today than in the past, 35% of consumers say they currently use plastic to pay for at least some or all of their everyday expenses. An additional 14% said they would use credit and charge cards to pay for the majority of their household expenses if given the choice.

“There are a significant number of Americans seeking the convenience of not having to carry cash, and consolidating their spending on one payment vehicle,” said Susan Sobbott, vice president, New Industries Development, American Express Travel Related Services Company, Inc. (TRS). “As a result, consumers are increasingly using credit cards to simplify their spending and get more from the money they spend through reward programs and cardmember benefits and services.”

The American Express ‘Everyday Spending’ Index, which surveyed consumer spending habits across a variety of industries, found that consumers are most comfortable using plastic in the following areas* home furnishings (61%), gas stations (56%), internet and online services (49%) and supermarkets (29%). Within those industries where credit cards are not as prevalent, consumers would most like to use credit cards in the following areas doctor’s offices and hospitals (33%), schools and universities (31%), telephone services and other monthly utilities (29%), fast food restaurants (26%), charities (20%), and mass transit, bridges and tolls (19%).

Further reinforcing consumer demand for more plastic acceptance, 80% of Americans agree merchants, regardless of the industry, should offer consumers as many payment options as possible. In addition, 60% of consumers surveyed felt that merchants who do not offer a variety of payment options are not customer-focused. Close to one in five (18%) said they will continue to seek new places to use plastic. Seventeen percent claim to have patronized a different merchant because credit cards were not welcome.

What Consumers Spend on Everyday Purchases

The national study conducted among 800 consumers found that the average person spends as much as $20,000 each year on typical household and recurring expenses including fast food restaurant meals, doctor’s visits, cable television, groceries, charitable donations, and monthly utilities.

According to the American Express ‘Everyday Spending’ Index, consumers estimate spending more than $500 a year on fast food, close to $900 annually on charitable donations, and more than $3,700 a year on groceries. However, whether its a $7 meal at a fast food restaurant, or a $1,000 medical expense, 39% of respondents said they are comfortable charging the expense no matter how large or small the actual dollar amount is.

“According to our study, 70% of consumers routinely pay their bills off each month, making these ‘convenience spenders’ who use plastic as a substitute for cash, responsible spenders as well,” added Susan Sobbott. “Many of our own Cardmembers demonstrate the same financial discipline each month.”

Convenience and Greater Spending Flexibility Drive Increased Usage While convenience, mentioned by 68%, was the most popular reason cited for using credit cards to pay for day-to-day expenses, consumers surveyed also mentioned reward programs and other benefits (61%), greater spending flexibility (59%), less check writing (56%), ability to ‘float’ until the next cycle (54%), preference to not carry cash (50%) and can better manage finances by tracking spending (45%).

The American Express ‘Everyday Spending’ Index is based on a study of America’s spending habits in seven industries which have introduced credit card and other plastic payment options within the last several years. The industries surveyed are supermarket, fast food restaurants, charities, healthcare, government services, telecommunications, and recurring services such as cable, utilities and local and long distance telephone.

American Express is welcome at stores, restaurants, hotels and service providers where Cardmembers spend on everything from health and beauty aids, to computers, to a weekend away. Current American Express research shows that based on the way Cardmembers use their American Express cards, Cardmembers can put 93 percent of their plastic spending on American Express. Presently, a fast-growing number of merchants worldwide welcome American Express with a new establishment accepting the Card every two minutes.

American Express Travel Related Services Company, Inc., is a wholly-owned subsidiary of the American Express Company — a diversified worldwide travel and financial services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking.

* Where consumers report using a credit card at least once within the past year

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