Credit card companies may not be among the ones to have benefited from holiday spending in 2010 as consumers moved to more cash payments for their Christmas shopping. One credit monitoring company reported the lowest percentage of credit cards used in the mega-shopping weekend after Thanksgiving with general credit card usage of two major credit cards falling more than 10 percent in the same quarter from a year ago.
For retailers, less credit may mean fewer impulse buys from customers carefully eyeing their balances the last two months. For credit card companies and banks, profits will take a dive as interest and penalty fees will be much lower than previous years. The one winner in the equation is the United States economy as a whole, with a large infusion of cash that will hopefully stimulate and invigorate the market.
However, credit card companies and retailers offering credit cards aren’t giving up so easily. From cash back to extra rewards points to discounts on purchases, everyone is offering incentives to get people back to the plastic. Only time will tell if the incentives are enough to lure consumers back to swiping after years of overspending.
Source: New York Times, December 2010