Industry News | September 7, 2012

Latinos the "Bright Spot" for Credit, Debit, Prepaid Cards

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Latino consumers are a bright spot in an otherwise dreary picture for issuers of credit, debit, and prepaid cards, according to “Consumer Payments in the U.S.: The Latino Market,” a just-released report from Packaged Facts. 

“The continuing disproportionate growth of the Latino population has made it increasingly important to the American consumer economy. Between 2000 and 2010, aggregate spending by Latinos doubled,” says David Sprinkle, publisher of Packaged Facts. “The affluence of Latinos with credit and debit cards, and the convenience provided by prepaid cards, are generating consistent growth in consumer spending.”

Latino spending is especially beneficial to credit card issuers.

Between 2004 and 2011, the number of non-Latino American consumers who owned credit cards fell 7 percent. Over the same time span, Latino cardholders increased 23 percent.

This vibrant growth helped moderate what would have been an even more significant drop over the 5 percent decline in the total number of credit card–owning Americans during the 2004–2011 period. 

More than 14 million Latinos own credit cards, accounting for 10 percent of all consumers who have or use them.

Credit card use among Latinos is often associated with affluence: One-third of Latinos using credit cards to pay their bills have a household income of $75,000 or more. Projections by Packaged Facts are that the proportion of credit card–holding Latinos will gradually return to pre-recession figures to eventually total 18 million by 2017.

The number of Latinos with debit/ATM cards more than doubled between 2004 and 2011, increasing 115 percent. In contrast, non-Latinos with debit/ATM cards increased only 51 percent.

Today, 21 million Latinos own debit/ATM cards, representing 14 percent of consumers of the total.

Packaged Facts forecasts the percentage of Latinos with debit/ATM cards will increase until it more closely matches the percentage of non-Latinos with debit cards. By 2017, 26 million Latinos will be debit card owners.

While Latinos represent a bright spot for credit and debit cards, they are the only source of light for prepaid cards.

Between 2011 and 2012, Latinos drove all of the growth in prepaid card use. Packaged Facts further reveals that almost 5 million Latinos used a prepaid debit card in the last 12 months, accounting for 15 percent of all consumers using these cards.

Going forward, the convenience and safety factors will contribute to continuing strong growth in Latino use of prepaid cards.

Packaged Facts projections are that by 2017, the percentage of Latinos using prepaid cards will increase to 16 percent, and that the number of Latinos depending on prepaid cards will exceed 6 million.