Consumers could return to tapping credit card debt in next five years

In the last several years, the nation's top lenders have seen consumers' attitudes toward credit card debt change considerably as a result of the economic downturn, but some expect borrowers to start moving toward their old habits in the next few years.

Between 2007 and the end of 2012, the amount of revenues enjoyed by credit card lenders is expected to have fallen by an average of 4 percent annually, to a total of $50.8 billion, according to new data from the industry research firm IBISWorld. This was the result of a large number of economic conditions, including lower employment rates, falling home values and tighter lending standards, as well as increased regulatory control over the lending industry. Altogether, these led consumer to rely less on revolving credit – that is, debt carried over from one month to the next – and higher rates of consumer delinquency and default. Currently, those two concerns alone absorb a total of 26.3 percent of lenders' revenues, though that's down from the high observed in 2009, at the height of the recent recession.

But now new statistics have shown that consumers are once again returning to using their credit cards to make everyday purchases again, though they are approaching it differently, the report said. Now, they make sure to pay off their bills on-time and in general are keeping balances low enough that they can pay them off in full at the end of every month. Whether that trend continues remains to be seen, but IBISWorld projects that credit card lenders will see increased revenues over the next five years through the end of 2017.

This will likely be for two reasons, the report said. First, lenders are generally increasing the value of rewards accounts that draw consumers in to borrowing more and – as a result of higher interest rates on these accounts – can generate more revenues. And second, experts predict there will be a huge surge in the use of mobile and online purchases in consumers' day to day life that will likewise lead to an increase in transactions as borrowers move away from using cash.

Consumers who have struggled with high balances in the past and sought debt relief as a result may not be as eager to return to their old borrowing habits, but improving personal and economic conditions might prompt them to do so.