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June 08, 2011

  • Shift In Canadian Credit Card Use, Pt.1
       Rewards makes a difference.

    A recent annual survey of Canadian credit card usage patterns by MarketSense shows a shift in the way consumers are using their cards. In the past, goods like groceries and drugstore items were paid for using cash but it is now acceptable to pay for these things using a credit card - experts say it's a psychological swing. In the wake of tough economical times, people are spending more on their credit cards, carrying more cards in their wallets and losing the hesitation to pay for essentials.

    Of the 5,051 people surveyed, 59 percent said they usually or always pay off their monthly card balance in full, up from 53 percent the year before. The results also show that cardholders are deliberately spending on cards with the best rewards programs. There seems to be a philosophy that if they are going to use a credit card, they may as well be collecting the rewards. MarketSense asked if people were using their credit cards at grocery stores, drugstores or gas stations in order to earn rewards points and 42 percent said yes.

    Industry experts agree it's a great strategy as long as the customer is able to pay off the balance every month. If not, the interest will most likely offset the value of the reward. Most of the time people use the credit card with the best of intensions but it can quickly lead to money mismanagement if they are not careful about how they budget their money. Some card reward programs encourage spending for everyday items by increasing the rewards earned at grocery stores, drugstores and gas stations. When the survey asked people whether they agreed with the statement "I don't like using cards for essential purchases like groceries" 42 percent said yes, which is down from 50 percent in 2009. To learn which cards are best for you, read on to part two.

    Continued...
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