Card Analysts Predict Credit Use Will Surge In 2012

by Mercator Advisory Group 0

Robust holiday spending is driving the speculation that U.S. consumers are shifting their use of credit and debit toward credit. Early spending patterns do suggest that total credit card spending is increasing, as it has all year.

According to First Data, a service that processes merchants’ credit card transactions, senior vice president Silvio Tavares, told CNN Money that “credit is back in favor.”

Card purchases rose each quarter this year, from 8.2 percent in the first quarter to 9 percent in the second quarter and 10.6 in the third quarter.

And the numbers added up at the cash register, too: According to a recent ARG/UBS Post Black Friday survey, Black Friday shoppers used their cards for 27 percent of their purchases this year, compared to 16 percent last year.

If the smashing success of Black Friday and Cyber Monday were any indication—retailers cashed in $52.4 billion on Black Friday this year, with the average consumer spending $400—Americans will start 2012 in more debt than ever.

Mercator is more cautious in its outlook for credit, seeing this year’s increased spending as driven by a narrower segment of financially secure consumers. And, as we have seen in recent years, increased spending does not necessarily convert to increased borrowing, as consumers continue to pay down revolving debt.

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