Canadians charge less on credit cards, but other spending is up: study – Country

A new study finds Canadians are charging slightly less for credit compared to a year ago when inflation was still high and buy now, pay later services grow more prominent.

JD Power’s survey of 6,478 Canadian credit cardholders released Thursday found the average consumer spends $1,144 per month on their primary card this year, down $11 from a year ago. .

However, the consumer data company found that spending on cash, debit cards and other non-credit card related expenses has increased by 51% this year.

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The finding comes as Canadians are grappling with rising costs with inflation at 7.6% and interest rates and mortgage rates rising in anticipation of further increases.

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Credit cards remain popular for solving such difficult problems – JD Power sees a 764 credit card customer satisfaction rating out of 1,000 _ but some Canadians are weighing options. Choose alternatives when buying big ticket items.

“Overall, credit card customer satisfaction in Canada has stabilized significantly over the past few years and we have even seen an increase in product satisfaction and benefit levels. , but macroeconomic trends and increasing competition from alternative lending providers should prompt John Cabell, executive director of payments intelligence at J.D. Power, to say in a statement. newspapers.

JD Power shows that 36% of credit card customers will consider other financing options such as personal loans or installments and buy now, pay for the following services, when making purchases great.

Personal loans are the most popular among loan alternatives, considered by 21% of customers when making a large purchase, followed by buy now, pay later to the following companies at 17% .

The data shows that credit card companies need to move quickly to retain customers, especially as recession predictions emerge, Cabell said.

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“Steps taken now to tighten problem-solving, better align rewards and benefits with customer needs, and improve customer engagement will be critical to retention.” customer retention and growth as we enter a potentially tough economic cycle.”

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His company’s research shows that 27% of credit card customers feel they fully understand the card’s benefits and features, and among cashback cardholders, satisfaction with rewards has decreased.” significantly” this year.

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The JD Power study was conducted from May to June and reached its conclusion by asking consumers about benefits and services, communication, credit card terms, customer interactions, and rewards. provided by financial institutions and services.

Part of the survey measures financial health by combining individual consumer spending/savings ratios, creditworthiness and safety net items such as insurance, and sets respondents ranged from healthy to vulnerable.

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More than half of respondents with credit cards are now classified as financially unhealthy, up 9 percentage points from a year ago.

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JD Power highlights that this change is even more pronounced than that seen in the US, where the proportion of customers using a credit card that is financially unhealthy has increased 4% this year.

It also found that 24% of credit card customers in Canada consider themselves financially worse off this year than they were last year.

More than 30% of credit card customers said they were carrying revolving debt on their primary card, up from 24% in 2021.

© 2022 Canadian Press

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