How Credit Card Usage Changed During the Pandemic
For the everyday person, the pandemic has certainly changed plenty of aspects of day-to-day life. Businesses now offer their employees remote positions, even takeout and curbside pickup has become more popular. However, one other area that has definitely felt an impact is the credit card world and how consumers have changed their usage. There are five categories of usage that have been affected by the pandemic and continue to see a shift. We are interested to see if these trends continue or if they slowly die out with the pandemic. Read more about these categories below:
The pandemic has brought on some new demands from consumers, such as contactless payments. This form of payment acceptance has grown significantly since the very beginning of COVID and its popularity is rising. For business owners, offering customers a safer way to pay is crucial to their doors remaining open during the pandemic. Consumers appreciate the benefits of contactless payments like not having to physically touch a point-of-sale device during checkout. This change is helping push contactless payments forward, which were initially slow to catch on.
Cash Back Reward Programs:
Cash back reward programs have always been a popular choice amongst cardholders.
The idea of being able to earn money back from a purchase would excite most shoppers. Cardholders can then use their savings to pay bills or buy things they either want or need. However, as of recently, both reward programs and program users have been on a continuous rise, causing a trend upwards. Cash back programs usually involve customers signing up online where their reward amount will then be stored as credit that they can use on their next purchase. Depending on the store, you can buy anything from luxury items to essentials. For consumers trying to save money throughout the pandemic, cash back rewards are a great way to make every purchase count.
Buy Now Pay Later (BNPL):
Buy Now Pay Later (BNPL) is becoming more popular since it entered the market. Allowing customers to pay for products now and pay later gives customers the opportunity to buy something that they couldn’t afford before. In short, BNPL is an interest-free loan that a customer agrees to at the time of purchase. BNPL is typically free and no credit check is required, so individuals who typically have no buying power with a low credit score can indulge at the checkout. BNPL’s popularity recently skyrocketed. As a result, most retailers currently offer some sort of program to help their customers buy now.
Credit Cards to Pay Bills:
Using a credit card to pay bills is nothing new. But this form of credit card usage has grown in the last few years. As prices and unemployment rates rise, the need to put your essential bills on a credit card has become more popular. As long as cardholders are responsible for the way they handle their finances, this way of paying can make sense. Typically, using a credit card to pay bills can help cardholders keep a better peace of mind. This is because service providers would no longer have access to banking information and credit cards have better financial protection if used fraudulently.
Virtual Credit Cards:
Virtual credit cards have been around for some time now, but they didn’t noticeably increase in popularity until 2020. This is around the same time that contactless payments caught on. When a business gets a virtual credit card, they are given a single 16-digit number on a plastic card. Each unique 16-digit number can be used for a one-time or recurring purchase. Cardholders enjoy this protection since their current account numbers aren’t used.
It's unclear if these trends will continue to grow. One thing we do know, is that the pandemic has brought awareness to consumers and business owners that there are other options when it comes to paying. What credit card usage trends have you seen change since the pandemic? Let us know on Twitter!