Credit Card Usage Is On Fire Again
According to First Data, credit card usage was up 8.2% YoY in 1Q2011, 9% YoY in 2Q2011, and 10.6% YoY in 3Q. If those aren’t healthy signs of consumers spending again, I don’t know what is. What’s a little more shocking is that the latest November industry-wide car sales figures are up 14% YoY to 994,000 according to Auto Data Corp with Chrysler leading the way up 45% YoY!
CNN recently highlighted that credit card mailings have surged 85% since the beginning of 2010 to 1.3 billion credit card offers in 3Q2011 and that online credit card use will increase by 63% from 2011 to 2016 according to Javelin Strategy & Research. There seems to be no stopping the use of credit cards is our daily lives. If you are a cash only man, you’re missing the great big bandwagon!
It’s becoming quite clear to me that the US consumer is alive and kicking with money to burn. Some may even call it the start of a bull market! We’ve been frugal for long enough and what better time to start spending money than during the holidays? I recently reported that I spent around $1,700 gross, and $1,010 net after reimbursement on my personal credit card in November, 2011. I definitely feel that I’m spending more than 10% over last year, perhaps more like 25% more.
Besides looking at the hard data, I’ve asked all my friends and family whether they are spending more this holiday season and the general answer is yes. I’m curious to know whether your credit card spending habits have picked up by 10% or more vs. last year as well.
One female friend who makes about $70,000 a year bought herself a $3,500 Louis Vuitton handbag on credit card. I think that’s nuts, but guys spend tens of thousands of dollars more on cars than they need, so oh well. I bought myself a pair of $315 Tod’s handmade loafer shoes for work, which were on sale from $485. I also think this is kind of nuts. I’ve wanted a pair for 5 years, but could never bring myself to spend more than $150 on a pair of work shoes. This year, I said what the hell.
The real issue is whether or not these healthy retail sales numbers will continue through the new year, or fade? I’m seriously considering returning my shoes because I feel too guilty spending double what I normally pay. There’s a good chance other people might feel the same, it’s just a little too early to tell since we’ve all got a 30 day return policy on average!
CREDIT CARD RECOMMENDATION
If you are an avid traveler and looking for a travel rewards credit card, you can sign up for the Barclaycard Arrival World MasterCard with a $89 annual fee for double the points on all purchases and 40,000 signup miles ($400 value) or the Barclaycard Arrival World MasterCard with no annual fee with double the points on travel and dining and 20,000 signup miles ($200 value). I’m going with the version with the annual fee because the first year’s fee is waived. You can read a more detailed review I wrote of the Barclaycard Arrival here.
Photo: Lake Tahoe Camp Fire, Sam.