About credit card dynamics and transaction value growth -- my own anecdote
Almost all (if not in fact all) the places I shop for even trivial things now accept VISA/MC, etc. -- even the so-called 'no frills' grocery stores. The last time I was in a place that didn't take cards was in April in an Italian restaurant in Belmont Shore in Long Beach that was probably running some kind of scam on somebody and would only take cash.
I now typically pay for absolutely everything by credit card because I have a graduated cash rebate deal (COF) on everything I buy that quickly scales up (1% from 0-10,000, 2% from 10,001-15,000, and 3% on purchases over $15,000 annually) -- I usually cross the 3% threshold around the end of the first quarter.
With that type of regime, why would I pay cash for anything when somebody wants to give me free money for using their card on stuff I'm going to buy anyway? It's even truly more convenient as well, given that one just has to transfer a monthly payment using on-line banking to clear the balance at the end of the month.
I used to buy everything on a GM VISA card that earned me 3% on everything towards a lease/purchase, but I dropped the GM card when I dropped GM from my list of potential auto suppliers.
Once in a blue moon I still take $100 out of an ATM -- that now lasts me weeks now instead of hours. I only need cash because I still can't bring myself to pay for a coffee with a credit card, plus cash is easier to throw in the pot after hockey when I'm out for a beer.
The point being, credit card usage has to be approaching maximum penetration here, i.e. there's no more market share growth to be had in taking business away from cash. This peak comes coincident with a cyclical top in the credit card business generally as defaults are rising from those who have bigger debt problems than $10 grand on a credit card they can't pay, e.g. they also have $300 or $500 grand on a mortgage they can't pay. Eventually the well does run dry.
Just more trouble in financial land that has yet to be reckoned with IMO. And as I sit here pondering the potential impacts, I also think it would be pretty hilarious listening to Bush try and explain a plan to bail out credit card defaulters |
