Credit Cards - Credit card users 'attracted to loyalty programs'

The provision of incentives plays a significant role in whether people use credit cards, new research shows.

Indeed, a study carried out by the Reserve Bank of Australia (RBA) reveals that those credit cards which come with an interest free period offer are particularly popular, the Australian Associated Press reports.

"Where there is no financial cost to accessing the line of credit because there is an interest-free period, consumers tend to use a credit card instead of a debit card," the RBA points out.

Findings from the bank indicated that consumers are 23 per cent more likely to use a credit card should it have some form of reward or loyalty program attached to it, with the introduction of such incentives partially attributed to the dramatic growth of credit card use in the mid to late 1990s.

The study also showed that debit and credit cards account for some 45 per cent of all transactions between the value of $25 and $200.

Meanwhile, Mark Wooden, Melbourne Institute economist and co-author of the government-commissioned Household, Income and Labour Dynamics in Australia report, recently revealed that Australians are particularly heavy credit card users, with 60 per cent of adults possessing at least one card.

Written by Mark Hornby