Credit cards swipe €8.5bn during boom

IRISH people carried out €8.5 billion worth of credit card transactions in 2001, as the appetite for debt and the plastic card continued to boom.

Favourable borrowing conditions are driving the boom and forecasters say €2.6 million credit cards will be in circulation in another five years.

Ireland, north and south, is now the fifth highest user of credit cards in Europe.

About one quarter of the Irish population have at least one card.

Approximately €1.9 million credit cards were in circulation in Ireland in 2001, 74% of them in the home market and 26% in Northern Ireland. This is expected to grow by 37% to €2.6 million over the next five years.

2001 saw a transaction volume of €125 million with a total transaction value of 8.5bn, according to Mintel, which carried out the research.

Low interest rates and higher disposable income levels are boosting Ireland’s credit card market, no longer seen as a product reserved for the more affluent.

Just under one quarter of the Irish population now have at least one credit card, said Mintel.

From a small underdeveloped market 10 years ago it has grown to one where there are over 300 cards per 1,000 inhabitants, the fifth highest in the EU.

Mintel said average APR (Annual Percentage Rate) on credit cards in Ireland tends to be at a lower rate than other European countries.

It has dropped from 21.5% in January, 1999 to 18.2% in June, 2001, adding to the attractiveness of the plastic card syndrome, said Mintel.

In Britain there are 1,300 different brands of credit cards linked to various companies, charities, causes and organisations.

At this stage 26.5% of respondents in the Republic possess a credit card, second only to 36% having a bank cash dispenser card.

In the North, 34.5% own credit and charge cards with 53% possessing a cash dispenser card. In both markets, Visa has almost twice the penetration of MasterCard.

Card holders are likely to juggle two or three credit cards for different payments rather than put all items on one card.

Switching providers and cards allows the consumer more mobility and freedom of choice.

They can therefore choose their cards from a number of issuers and not feel restricted or obliged to obtain a credit card from their current account provider.

Consumer spending, which has risen by 89% in the Republic between 1997 and 2001, appears to be the key reason behind the surge on plastic cards.

Credit card debt for Irish residents has risen from €620m in 1998 to €1,095m in 2001, an increase of €475m.

Alison Surgeoner, who carried out the research, said the amount of debt has added to government concerns that consumers will be unable to sustain these debt levels and the associated repayments.

Her research did not delve into the amount of people who cancel their cards or who default on credit card debt.