The FRB Boston has announced a new study analyzing data from the 2008 and 2009 Survey of Consumer Payment Choice (SCPC), looking at the “abandonment rate” for various payment products.
A sizable and growing minority of American consumers who once possessed a credit card no longer have one. Surveys completed over the past two years by the Federal Reserve Bank of Boston’s Consumer Payments Research Center indicate that the “discard rate,” the percentage of consumers who have abandoned – voluntarily or not – that method of paying for purchases, grew from 14 percent in 2008 to 16.5 percent in 2009.
The discard rate among consumers for prepaid payment cards was 27.5 percent in the 2008 survey, nearly twice as high as that for credit cards. Part of this higher rate is attributable to the frequent use of prepaid payment cards as gifts and prizes; a portion of those who are given prepaid cards are “passive adopters” of that payment instrument and do not tend to become regular users.
The discard rate for debit and DDA accounts, by contrast, was just 5%. And, the rate of discard is apparently increasing:
Our preliminary estimates show increases in the 2009 discard rates for all types of cards – credit, debit and prepaid.
Mercator CustomerMonitor Survey Series results for 2010 confirm the net results of the discard effect, with marked declines in the number of households having general purpose and private label credit cards, while debit holding increased over 2009.