More People Than Ever Using Credit Cards, Study Finds

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Credit cards are in more people's wallets than ever before and the two bank card brands, Visa and MasterCard, continue to be consumers' top choices.

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The annual American Banker/Gallup consumer survey showed 89% of 1,024 randomly selected households had at least one credit card, and 78% had a MasterCard or Visa.

Among individual brands, Visa led at 66% of households. The only greater response was in the fragmented "retail store card" category, at 72%.

MasterCard came next at 53% -- its three-point rise in 1994 equal to that of Visa.

Visa also remained No. 1 by a sizable margin in cards that consumers say they use most often, at 39%. It was up two percentage points -- within the statistical margin of error -- while MasterCard was up by one point, to 22%.

Since 1990, Visa has seen the most-used number shoot up by eight percentage points, while MasterCard, despite a measurable increase in transaction market share, barely held its ground.

Among other major brands, Discover had a healthy five-point increase in cardholding households this year, to 31%, and American Express, including its Optima program, fell a slight two points, to 24%.

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Those nonbank brands are lagging in the most-used measure, American Express at 7% and Discover at 6%.

Consultant K. Shelley Porges of Porges/Hudson Marketing Inc., San Francisco, said Discover's outstandings have declined. "The fact that they've gotten into more households doesn't guarantee that they'll have profitable growth," she said.

Ms. Porges said the Discover card's high interest rate makes it unattractive for consumers. "Pricing is the No. 1 motivator of revolvers -- it's no surprise [low-rate issuers] have captured the greatest share while others have declined," Ms. Porges added.

She said bank card issuers Signet Banking Corp., First U.S.A. Inc., Household International, Wachovia Corp., and Advanta Corp. have the five top growth portfolios.

Ms. Porges' assessment is "at odds with our numbers," said Timothy Lee, spokesman for Dean Witter, Discover & Co. "Discover transactions are doing very well, our business is excellent."

Jan Soderstrom, senior vice president, advertising and marketing services for Visa, said the numbers show that member banks have been very successful in attracting cardholders and getting them to use their cards in a competitive marketplace. She added that it attests to Visa's brand strength.

The survey indicated that of people with at least one Visa card, 51% say they use Visa most often. MasterCard converts only 36% of its card-owning households into primary users of its brand, compared to American Express' 31% and Discover's 17%.

Visa U.S.A.'s own third-quarter numbers bear out the survey results. Transaction volume was up 28.2% over the same quarter last year, to $74.7 billion from $58.3 billion. The number of cards in circulation in the United States rose 21.3% to 196.5 million.

MasterCard also had significant growth. U.S. charge volume rose 25.6% over the 1993 third quarter, to $44.7 billion from $35.6 billion. The number of cards increased 19.9% to 131.8 million.

Robert L. Lattera, MasterCard vice president of market research, said the American Banker survey responses may reflect a "perception bias" in favor of Visa. "MasterCard is growing in terms of share of accounts, Visa is not," he said.

Mr. Lattera said that according to statistics compiled by an independent consulting firm, which tabulates figures from 2,000 consumer bank card statements, Visa's market share increased from 67% to 68% since 1991, while MasterCard grew from 52% to 56%. …