The results of the 2013 GreedyRates.ca Credit Card Survey are in, and they reveal some surprising facts about Canadians and their credit card preferences.
Going into the survey, when we asked what credit card features are most important to Canadians when they compare credit card offers, we expected rewards to be the clear winner. To our surprise, an overwhelming majority chose interest rates as their most important credit card feature, more than triple those who chose rewards:
56% Low Interest Rate
15% Annual Fee
5% Credit Line
While this seems to contradict the general migration towards rewards credit cards, this would come as no surprise to the millions of Canadians who collectively carry over $85 billion in credit card debt according to the latest Nilson Report – each of whom yearn for lower rates to ease the burden of interest payments. While Canada does have a roster of low interest creidt cards, they are rarely marketed aggressively by the big banks and most carry an annual fee to get access to a lower rate. This is in sharp contrast to the U.S. and U.K. markets which compete much more heavily on low interest rates for purchases, balance transfers and cash advances alike. It seems like there’s additional room to address the rate sensitive market.
While low interest rates were the most important feature whether tallied by gender, province or age, there were differences between income groups. Those below $50K were much more skewed in favor of low interest rates,while those earning above $50K favored rewards, as shown below:
24% Low Interest Rate
22% Annual Fee
13% Credit Line
So while a significant portion of the population is looking for lower rates, there’s a whole other segment of the population that’s looking for rewards – those making more. Interestingly, while the majority of both men and women chose low rates as their most important option, women chose it more often than men, perhaps indicating either a more conservative use of credit cards than men, or that they carry more balances and are thus more rate sensitive.
Canadians tend to be split when it comes to the use of their credit cards, either never wanting to use it, or trying to use it for all expenses:
34% I Try to Avoid it at All Costs
28% For Every Possible Expense
14% When I Don’t Have Cash On Me
11% When I Need To Borrow Money
5% WhenI Can’t use My Debit Card
When segmented, the numbers revealed that those earning less than $50K have a preference for low rates and also try to avoid credit card usage at all costs. On the flip side, for those earning more than $50K, they have a preference for rewards and try to use their credit card whenever possible.
Women seemed to be more conservative in their approach to credit, with more women choosing I Try to Avoid it At All Costs than men, although by a small margin of 4 percentage points, running counter to the stereotype of women coveting credit cards to max out while shopping.
So what does all of this tell us? At a high level, Canadians seem to be perfectly rational. Those earning less, try to avoid using their credit card, but when they do use it, want one with a low interest rate, likely because they used the lending facility of their credit card.
Higher earning Canadians on the other hand, try to use their credit card as often as they can, so that they can accumulate points. They value rewards most, because they’re not using or at least intending to use their credit card to borrow money. That said, a surprisingly large number of high earners value a low interest rate as well, which given the scale of Canadian consumer indebtedness, should come as no surprise to anyone. This could indicate that either a large number high earners have gotten lured in by rewards programs and found themselves unable to pay their balance, or that they too are looking for additional credit facilities. No matter the income level, cardholders are finding themselves more sensitive to the debt load they are carrying or want to carry.
This survey was conducted by GreedyRates.ca using Google Consumer Surveys and has over 3,000 responses. Over 70% of respondents were 45 years or older.