Credit and debit cards in tandem have emerged for U.S. consumers as two necessary financial management products. The functionality of each increases the value of the other for budget and spending planning. That’s the key finding of the MasterCard Global Insights annual Credit-Debit Spending Report, which this year measured the attitudes, behaviors and spend levels of more than 5,000 consumers in addition to statistical analysis of publically available U.S. consumer spend data. Among the detailed findings:
- 2013 saw significant growth in spending on both credit and debit cards. Credit card spending grew by $174 billion to approximately $2.4 trillion, up 7.8 percent from 2012. Debit card spending grew by $158 billion to $2.1 trillion, also up 7.8 percent. Consumers have different purposes for both credit and debit and use each depending on situational needs. This finding is not new, having been a key learning of Global Insights credit/debit work since its 2009 inception. But the lines dividing the functionality and value of debit from credit are brighter and sharper in consumers’ minds. The symbiotic value of both together as household liquidity management tools is now a centerpiece of U.S. consumer attitudes and behaviors.
- MasterCard’s models show that in 2013, $12.3 billion of credit card spending growth came from displacing cash, accounting for 7.1 percent of all credit card spending growth. For debit cards, $10.9 billion of that instrument’s spending growth came from displacing cash, also 7.1 percent for its annual spending growth.
- For debit, replacing cash and credit cards has been a significant source of growth since the start of the crisis—18.5 percent of all debit card spending growth since 2008 came from displacing credit cards, and 13.6 percent came from cash. From 2012 to 2013, approximately $25 billion in spending has shifted to credit cards from cash.
- Analysis of market research of credit and debit usage reflects consumer confidence. Fully 79 percent of those surveyed had confidence in reaching their financial goals and 68 percent said they were confident they’d have enough for their retirement.
- The results of Global Insights’ study show there are four clusters of consumers with different attitudes, behaviors, and goals. Understanding how these groups differ is critical for those financial institutions dealing with them—there is too much complexity at stake to simply invoke a “one-size-fits-all” strategy.