How the pandemic has accelerated the demise of credit cards, in 4 charts
- U.S. consumers are slashing their credit card use, particularly Millennials and Gen Z.
- The declining popularity of credit cards among young shoppers could be an early sign of a permanent shift in consumer preferences.
The credit card has a long-standing relationship with the American consumer. It’s certainly come a long way since the launch of Diners Club — the world’s first consumer-facing credit card company — in 1950, and American Express’ issuance of the world’s first plastic card in 1959.
But after decades of dominance in the U.S., the credit card may finally be losing its hold over American finance. The move away from credit cards seems to have accelerated over the last year and a half, thanks largely to (you guessed it) the pandemic and the resulting economic uncertainty, as well as the growing popularity of alternative payment options such as Buy Now, Pay Later.
Customer satisfaction with credit card issuers has seen a visible decline this year, owing to increasing financial uncertainty, combined with factors such as high interest rates, shrinking credit limits, and misdirected rewards programs. Credit card issuers are struggling to meet the rapidly evolving expectations of customers through the pandemic.
“The industry missed the mark on supporting customers’ changing needs when many were facing significant financial challenges,” said John Cabell, director of banking and payments intelligence at J.D. Power. “Whether through tightening credit limits at the very moment when customers were most reliant on their cards for short-term funding, or through a lack of customer service accessibility, credit card issuers experienced declines in overall satisfaction, trust, and brand perception this year.”
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