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Research and Statistics

How different cultures handle credit cards


With credit card habits varying widely across the world, there are lessons that can be learned from studying how people in other cultures handle money.

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Not all cultures treat their plastic the way we do here in the United States.

With 73 percent of American households owning a credit card, it’s easy to think that everyday credit card usage is a way of life. But with credit card habits varying widely across the world, there are lessons that can be learned from studying how people in other cultures handle money.

“There’s a cultural aspect to the way people use credit,” says Susan Hirshman, president of SHE Ltd., a New York-based consulting firm that works to enhance the financial literacy of women globally. Hirshman points out that people often spend money according to the norms of their society. “If having five cars is what people think is normal, then they’re going to think ‘I should have five cars,'” she says.

The same is true with credit. In the United States, credit wasn’t always king, but in the past decade it became almost fashionable, with the number of credit card charges increasing from $69 billion a year in 1989 to more than $1.8 trillion in 2006, according to  While some of that debt resulted from Americans experiencing tough times, such as job loss and medical expenses, a survey by Demos found that the most frequently cited expenses leading to credit card debt were small purchases of non-essential goods and services.

In other countries, credit cards are used for different types of purchases. For example, a multinational public opinion survey done by Citibank found that the Chinese were most likely to use credit cards for big-ticket items such as home electronics, whereas in Australia, more than half of respondents reported using credit cards to take care of such necessities as utility bills. (See “Credit cards around the world”.)

Differing perceptions on credit cards can also be seen in online shopping habits. While credit cards today are the main tool used in the United States for online shopping, the British and French prefer debit cards, while Germans rely primarily on online bank transfers and PayPal, according to Forrester Research.

Other cultures also differ in their propensity to use credit cards at all. The average American makes $4,236 in credit card transactions a year, according to business intelligence firm Euromonitor International. Australians and Canadians spend more, making $7,889 and $7,406 in credit card transactions respectively. On the flip side, the average French citizen makes $267 in credit card charges annually, and Germans on average charge only $158 a year. (See chart on global credit card and savings statistics.)

Preference for cash

Twenty-five-year-old Jamie Alana Cooper, of Neptune, N.J., has traveled to such countries as Bahrain, Turkey, Germany and Israel. During her travels, she’s noticed a reluctance by many to use plastic. “In the United States, I think it’s commonplace even if you go to the drugstore you might use a credit card,” she says. “My friend in Bahrain was paying vendors from her wedding in cash.”

Austin Morgan, a 24-year-old American teaching in Japan, agrees. Morgan, who blogs about how financial practices differ around the world at, says, “Living abroad has reminded me that credit cards aren’t as popular everywhere as they seem to be in America,” he says. “I rarely see credit cards used here.”

While perceptions about money and credit may cause some cultures to spend differently, economic realities also play a key role. Some countries just haven’t had the access to credit, nor a sizable middle class to fuel its use.

That, however, is changing as countries experience economic growth. For example, according to Euromonitor, the average Chinese citizen charges about $297 per year, but that is up by 67.7 percent since 2005. As far as credit card debt goes, “I think 20 years from now, China will be similar to the United States today because there will be this middle class wanting nicer and nicer things,” says SHE’s Hirshman.

Lessons to be learned

If you’re struggling to get out of debt, you can be tempted to think that the less a culture relies on credit the more financially savvy it is, but that’s not necessarily true, says Tanisha Warner, a spokeswoman for Money Management International, a Texas-based credit counseling firm. “Simply using credit is not a bad thing; the way you pay it determines whether or not you’re using it wisely. Here in the United States, many consumers use their credit cards for everyday purchases to take advantage of rewards and pay those purchase balances in full.”

However, the cultures that spend less on credit cards tend to have higher savings rates than the cultures that spend more on credit cards. For example, the French and Germans, who don’t rely heavily on credit cards, save more than 10 percent of their disposable income, compared to  Americans, who save 4.3 percent, according to the Organisation for Economic Co-operation and Development.

“Americans should absolutely save more,” says Warner. “If we were saving more, we may not have to rely on credit for emergencies and other unexpected costs.”

For the 51 percent of Americans who’ve carried a balance in the past year, lessons can also be learned by looking to cultures such as South Korea, where 81 percent pay off their balances each month.

On the other hand, there are lessons for other cultures to learn from us. For example, credit cards provide a level of security that debit cards don’t when used for online shopping, Warner points out. Likewise, countries that are using credit cards more frequently can look to the credit card meltdown in the United States as a lesson in what can happen when you use credit to live above your means, Morgan says.

At the very least, being aware of cultural differences when it comes to using credit can remind Americans to be more mindful about when they reach for plastic and when they rely on cash. For Alana Cooper, it has opened up a new appreciation for cash. “I think you’re more responsible for your money when you’re actually holding it in your hand and not just swiping a piece of plastic every time,” she says. “You definitely are more conscious of how much you have in your wallet.”

Global credit card and savings statistics
  CountryAverage dollar amount spent on transactions for 2010* Transaction growth rate between 2005-2010*Online payment preferences**Number of credit cards in circulation in 2009* Household savings rates***
Australia $7,8895.1%Credit cards most popular, followed by PayPal.16 million4.3%
Canada7,4064.2%Credit cards most popular, followed by PayPal and then debit.72 million5%
China$29767.7%Two-thirds use Alipay, an alternative payment system; 40% use cash.199 million37.9%
France$26711.7%Debit most popular, used by 3/4 of adults in past three months, followed by PayPal.34 million16.3%
Germany $1580.2%Online bank transfers and PayPal most popular.4 million11.3
Japan $3,8708.2%Credit cards most popular, followed by cash.346 million2.3%
South Korea$5,01912%Credit cards most popular, with 80% of adults using them for online purchases.96 million3.6%
United Kingdom $2,699-.1%Debit most popular, with more than 2/3 using them in the past three months; credit cards and PayPal follow for roughly half of online shoppers.60.7 million7%
United States$4,236-.1%Credit cards dominate majority of online shoppers, with debit cards next. 20% say they use debit more frequently than a year ago.686 million4.3%
* 2010 Euromonitor International
**2010, Forrester Research Inc.
***China household savings rate as of 2007: CEIC
Rest of savings rates as of 2009: Organisation for Economic Co-operation and Development

ee related:  Credit cards around the world, Debit card transactions fueled by small ticket transactions, Unsure what to save for first? Follow these top 5 savings priorities, Debit vs. credit: Which offers more protection?

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