Consumer Payment Card News

Deadbeat Retreat

The number of American cardholders paying off credit card balances in full each month, often sarcastically referred to as “deadbeats,” continues to decline after a steady increase in each of the past 20 years. This is good news for card issuers as more consumers accrue interest charges, rather than just milking credit card rewards programs. The reversal in the “transactor” trend began to take place in July 2001 as the effects of the recession took hold. In June 2001, 44.6% of consumer cardholders were clearing balances each month, according to CardWeb.com’s CardData financial surveillance service. The decline in the percentage of transactors noticeably accelerated in the wake of 9/11, dropping to 42.1% by the end of the year. Since the first of this year, the percentage of transactors has dipped to 40.3%.

                               BANK CREDIT CARD CONVENIENCE USAGE
                    (percentage of cardholders that consistently pay-off
                                balances in-full each month)
                          1990:  28.6%               1997:  40.2%
                          1991:  29.2%               1998:  42.0%
                          1992:  31.3%               1999:  43.4%
                          1993:  33.7%               2000:  44.4%
                          1994:  35.1%               2001:  42.1%
                          1995:  37.9%               2002*: 40.3%
                          1996:  38.5%
                                     * as of April 30, 2002
                          SOURCE: CardData (www.carddata.com)

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