New data from the Survey and Diary of Consumer Payment Choice released June 3 reaffirm the continuing popularity of credit cards. An outlier among payment instruments, credit cards—unlike paper checks, debit cards, and cash—serve as both a way to pay and a consumer loan.
First, let's focus on a credit card's utility for payments. Slightly more than half of consumers with a credit card use them only to make payments and pay off the balance in full every month, not as a way to borrow.
Consumer assessments of payment instrument characteristics come into play when choosing how to pay. Compared to other payment instruments, credit cards have ranked first in consumers' eyes for security, acceptance, payment records, and convenience in all years 2017 through 2023.
Compared to 2015, more consumers stated preferences for using credit cards in various situations:
- 57 percent prefer credit cards for online payments, up 6 percentage points from 2015
- 36 percent prefer credit cards for in-person payments, up 8 percentage points
- 18 percent prefer credit cards for paying bills, up 8 percentage points
These assessments and preferences translated into behavior in October 2023:
- 82 percent of US consumers owned a credit card
- Among consumers with a credit card, half had one or two cards and almost one-quarter had five or more
- US consumers made, on average, 15 credit card payments and 32 percent of their total payments
- They charged, on average, $1,126 per consumer, 21 percent of the total value of payments per consumer
The cost of credit card use varied depending upon whether or not consumers pay fees:
- Sixty-eight percent of credit card owners reported that they did not pay any credit card fees in 2023.
- For the 32 percent of adopters who paid fees, the most common fee paid was an annual fee, reported by 20 percent of credit card adopters. Next most common was a late payment fee, with 6 percent of adopters paying late fees.
Second: credit cards used to borrow. The cost of credit card use was greater for the 47 percent of consumers who revolve debt on credit cards in October 2023. These "revolvers" use credit cards less than people who pay in full every month. One study using 2019 data found that revolvers made less than 20 percent of the value of their monthly payments using credit cards. People who paid down the balance every month put half of the value of their payments on credit cards.
You can take a deeper dive into these data on our website.
By Claire Greene, payments expert in the Retail Payments Risk Forum at the Atlanta Fed