The use of credit cards could fall out of favor with American consumers, suggest the results of a new survey by Fintech GoCardless.
Three in four respondents (76%) would like to reduce their use of credit cards while 77% prefer debit cards to credit cards. These trends are even more pronounced among younger people, with 84% of people aged 18 to 40 wanting to reduce their use of credit cards and 87 to 89% preferring debit to credit. While 70% overall prefer interest-free installment providers over credit cards, that number doubles, from 43% of those aged 57 and over to 87% of those aged 18-40.
Most Americans (63%) said they were less likely to use credit cards now than they were before the pandemic began. This rate rises to 74% for 25-40 year olds and 76% for 18-24 year olds.
The most common reasons for avoiding credit are fear of debt, fear of inability to pay monthly balances, and worries about even being able to pay the minimum payment.
“The pandemic has put people in difficult financial positions, and this has probably accelerated the abandonment of credit cards. But it’s part of a larger trend, especially among young Americans, ”said Hiroki takeuchi, co-founder and CEO of GoCardless. “Alternative payment methods such as buy now pay later are booming, and Americans are also discovering the benefits of account-to-account payments such as ACH bit rate, which have been popular in other parts of the world for years. Although they have dominated the United States for decades, it is clear that a seismic shift has begun and that credit cards will be obsolete in a generation or two.