70% of Britons Prefer To Use Cashback Credit Cards

A recent report issued by Morgan Stanley Credit Card throws up some very interesting reading on the spending habits of UK credit card users. One the one hand, each of us averages 1.2 credit cards in our wallets and purses. On the other hand, one in three of the UK approved and issued credit cards we have in our wallets and purses is never even used. Most notable of all, however, if you believe the report’s findings, is that over 70% of us in the UK prefer to use a cash-back credit card to any other.

While it may be the case that UK credit card issuers offering cash back loyalty programs are popular among UK credit card users, for many of the hundreds of UK credit card issuers offering alternative loyalty bonus schemes, such as the traditionally popular air-miles and ethical “green” loyalty programmes, the report’s findings may come as somewhat of a surprise – especially when you take into consideration the fact that there are now approximately 150 Chip and Pin credit card transactions processed every second of the day in the UK!

This initial surprise, however, may become more skeptical when you add two additional significant findings to come out of the questionnaire asked of the 2,000 respondents in the UK on behalf of Morgan Stanley - the fact that a significant proportion of the UK credit cards that are supposedly going unused have allegedly been issued by one of the ‘Big Four’ UK high street banks and, moreover, that a significant number of 0% interest credit cards are lying dormant in the users’ wallets and purses.

However, given that this questionnaire survey and its subsequent report findings were commissioned on behalf of Morgan Stanley, who is both a provider of a cash-back credit card and also a bank that would not, even by its own standards, be included among one of the ‘Big Four’ UK high street banks, this probably should not be overly surprising and must be particularly reassuring for Morgan Stanley’s credit card operations in the UK.

Nevertheless, what the report’s findings do apparently confirm is a growing trend among UK credit card users to elect to use a credit card that offers them some form of payback in the form of a loyalty programme. But, with approximately 60% of all UK credit card users ‘rolling over’ their credit card debt until the next credit card statement date, this does beg another question that should now be included among any UK credit card usage questionnaire being asked of the great British public:

“should we now be less concerned with the various different types of loss-leading loyalty programmes that UK credit card issuers are offering us as enticements to continue using their credit cards and start becoming more concerned with repaying our actual credit card debt?”

Richard Smith
22nd August 2006

More Information:

• Credit Card Benefits
  A credit card can be a highly effective and flexible financial tool for the smart shopper – and saver. It has many obvious advantages over cash and cheques – and a few hidden ones too!
• Cash Back or Rewards
  In the battle for new customers, credit card companies are offering to reward users for simply spending on their cards. The two most attractive systems seem to be cash back and rewards.
• Credit Card Incentives article - from the Choosing and Using website

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