Home > 2011 > Managing Debt > The Credit Card is Back, Just in Time to Fuel Your Holiday Spending Hangover

The Credit Card is Back, Just in Time to Fuel Your Holiday Spending Hangover

Advertiser Disclosure Comments 0 Comments

Javelin’s 4th Annual Online Retail Payments Forecast, based on data collected online from more than 2,300 consumers, was published last week. Among other things, it predicts that online e-commerce sales in the US will total $309 billion in 2011, growing to $444 billion in 2016. Significantly, the research also suggests strongly that credit cards will be used to pay for these purchases more and more often as debit card usage will stay flat or grow at a very modest rate.

[Article: How Extended Warranties Work on Credit Cards]

Beth Robertson, Director of Payments Research at Javelin, said “After several years of declining use, credit cards are poised for resurgence. Despite the nation’s very rocky economic recovery, consumers appear to have halted their belt-tightening and bank incentives to use credit cards rather than debit are gaining appeal.”

As online sales are expected grow robustly during the next five years, the Javelin study projects that the total volume for credit card payments made online by U.S. consumers will climb 63%, while payment by debit card is projected to rise just 2% during that same period.

There is a persuasive argument that credit card usage is climbing not because it’s more convenient, and not because banks are charging consumers to use debit card fees, but rather because credit for most Americans—to put it simply—is back.

[Resource: Get your free Credit Report Card]

Between the meltdown in 2008 and this holiday season, credit which generally had been strangled after the demise of Lehman Brothers has slowly but steadily been eased. The big news in 2009 was the massive reduction—usually done summarily and without notice—of credit limits on the charge cards of millions of Americans. Also, during that time a great number of people lost their credit cards altogether as issuers became more and more cautious (or terrified). But you don’t hear about those things happening anymore, or at least not on a regular basis.

At least so far this holiday season, holiday purchases, whether online or in stores, seem quite strong. Since we live in a consumer driven economy, this is regarded as very good news. On the other hand, it’s considerably easier to overspend foolishly—or even recklessly—with a newly roomy credit card, as opposed to that debit card with a hard limit called a bank balance. Moreover, unless you belong to that small minority of consumers who actually pay their credit card bills in full every month, interest charges can make seemingly bargain-priced purchases a lot more expensive.

The fear is that enthusiastic usage of credit cards on Black Fridays will make for a hell of a lot more red ink on pay-the-piper Mondays. As always, let the buyer beware.

[Featured Product: Looking for credit cards for excellent credit?]

Image: Neil Kronberg, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.