In Ratehub.ca’s 2017 Digital Money Trends Report, we look at the relationship Canadians have with personal finance. Specifically, we examined trends related to mortgages, saving, insurance, and more.
Here’s what we learned about credit cards.
The reasons we all get credit cards are different
In general, people can apply for a credit card for three reasons: building credit, getting a lower interest rate, or collecting rewards.
Overall, the primary reason people reported for applying for their most recent credit card was to collect rewards, but the reason changed when we look at different generations.
Millennials were far more likely to report that building credit was their reason for applying for a credit card, likely due to their age and position in their financial lifecycle. Similar percentages of respondents from each generation (about 20%) reported that their most recent credit card application was in pursuit of low interest rates. Unsurprisingly, generation Xers and boomers reported more likely to apply for a credit card to collect rewards.
Added to those three primary reasons, there is always another opportunity to benefit self-interest. 38% of respondents indicated that they applied for a credit card to receive a sign-up bonus.
Your primary financial institution probably has a place in your wallet
Amongst our survey respondents, there was a definite preference for people to have credit cards from their primary financial institution. We initially thought that preference might be lower amongst digitally savvy millennials, but surprisingly it was not. More than 80% of millennials in our survey reported having a credit card from their primary financial institution. That number dropped through the generations, hitting a low of 66% amongst boomers.
But there are other credit cards in your wallet as well
We found in our report that the average respondent had 1.9 credit cards, so the average wallet contains more than a single credit card from your primary financial institution. Beyond that similarity though, the actual share of wallet seems quite fragmented.
As expected, the big banks have larger shares of the respondent wallets, varying between 14 and 23% of wallet share each, but others, such as Capital One and PC Financial (now Simplii) also have a surprisingly large share.
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Cash back is the most popular credit card feature
While features such as low interest and low annual fees continue to be popular for credit card applicants, our survey respondents indicated that the most important feature on their credit cards was the cash back feature.
MasterCard is the most-searched brand
In 2017, Canadians searched for credit card-related keywords more than two million times per month. These searches include both store credit cards and ones offered by banks.
The highest searched credit card brand was MasterCard. Additionally, the top four store credit cards had a higher total search volume than the Big Five banks.
It could be that while Canadians have a great deal of loyalty to their primary financial institution, they also like to be aware of their other credit card options.
Canadians are not afraid to use their credit cards
Our survey respondents indicated that they made 49% of their monthly purchases using a credit card. The good news is that this means many Canadians are reaping the benefits of their credit card rewards.
The bad news is that using credit cards can lead to credit card debt. In our survey, 62% of respondents indicated that they were carrying credit card debt.
However, even though Canadian household debt level are rising, the situation isn’t all bad. Only 13% of survey respondents indicated that they held more than 50% of their credit limit in debt, and 45% of respondents with any credit card debt expected to pay off the debt in less than three months.
You can read more about these conclusions, and a whole lot more, in the 2017 Digital Money Trends Report.