Consumers continue to avoid credit for online purchases

While the economic downturn has not reduced consumer’s online spending, it has significantly altered the way they choose to pay for purchases, a new report says.

Despite this, credit cards are still the most common form of online payment, in 2010, the purchasing method has seen reductions in volume and in frequency.

For example, a recent Javelin Strategy and Research report found that credit cards accounted for 40 percent of all online payments in 2010 – down four percent from last year’s figures. In addition, the study found that the number of times a card was used per month for purchases reduced drastically.

“A doubling of the unemployment rate from 2007 to 2010 increased the risk associated with unsecured revolving credit, led to a surge of delinquencies and late payments and resulted in a decrease in credit availability,” said James Van Dyke, Javelin Strategy’s president and founder. “Consumer use of credit cards for online payments has sharply declined as issuers have tightened credit.”

The study falls in line with most consumer polls, which have found that cardholders plan to use debit, cash and checks as ways to avoid credit card debt this holiday season.