It appears that American consumers have crossed a major psychological threshold when it comes to personal finances. According to a recent survey by MarketSense Inc. there is a growing acceptance of using credit cards for essentials like groceries and prescription drugs which people have traditionally paid for in cash.
“People are getting smarter,” said Lynda Lovett, a principal at the research firm MarketSense Inc. “Plus, the industry has taught cardholders that if they are going to use a card, they might as well be collecting a reward.”
The survey asked two questions regarding the matter. First, it asked people whether they agreed with the statement, “I don’t like using credit cards for essential purchases like groceries,” and 42% of the respondents said yes, down from 50% in 2009. Secondly, they asked for the first time whether people were using their cards more often at grocery stores, drugstores or gas stations in order to earn reward points and 42% yes.
The survey results suggest that cardholders are taking a tougher more analytical approach to card spending that emphasizes rewards. Using a credit card to pay for groceries is a great way to build up points as long as you are able to pay your bill in full at the end of every month which 59% of the participants said that they did. If you don’t pay off your card in full at the end of every month, then the interest that applies on your card balance will more than offset the dollar value of your rewards so it won’t really help those who carry a revolving balance.
Credit card companies offer a wide variety of rewards and most actually provide bonus points for money spent on essentials like groceries, gas, and drug store purchases. The MarketSense survey found that travel remains the most popular type of credit card reward, but the number of people choosing cash back or discounted gas cards are on the rise.
According to MarketSense the credit card purchases reported by survey participants rose to $912 a month, up from $797 in 2009. No word on how much of that money was spent on groceries.
As always, stay tuned to Credit Cards Professor for more credit card news and updates.
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