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Thoughts on MasterCard’s 3Q

By Janna Herron ·
Friday, November 4, 2011
Posted: 4 pm ET

Last week, I promised my perspective on MasterCard's third-quarter earnings after Visa's results last week held some interesting nuggets. Well, here it is, folks:

1. You were really happy if you owned the credit card company's stock.

MasterCard handedly beat estimates for its profit, and investors celebrated. Sadly, I don't own the stock and second, I'm more interested in how people are using their MasterCard debit and credit cards.

So, on to No. 2.

2. People are not turning to their credit cards to protest debit card usage fees.

As you may recall, Visa last week revealed that growth in credit card spending outdid debit card spending growth, something that hadn't happened in a long time. Of course, some wanted to blame the new debit card usage fees for the unexpected jump in credit card spending. But Visa execs asked us to hold our horses, because it was soon to tell.

MasterCard tells us this week that debit card spending in the U.S. eclipsed credit card spending in its third quarter, rising 23 percent versus 7 percent. So, either MasterCard holders are not as upset about debit card fees as Visa cardholders, or the theory holds no water. Take your pick.

Either way, those debit card fees are moot, at least for now. Most banks have eliminated them or their plans to impose them.

3. Which Americans are spending?

Last week, Visa noted that increased spending on credit cards came mostly from the more well-heeled consumers. The company's CFO said it hadn't seen an across-the-board recovery in credit card spending.

In an interview with The Associated Press, MasterCard's CFO, Martina Hund-Mejean, pointed out that some cardholders are also spending more on electronics and luxury goods. That sounds like it jives with Visa.

But some of the increase in credit card spending came from higher gas and food prices. That sounds more like cash-strapped American spending to me.

However, some readers of my blog have pointed out that consumers sometimes earn more credit card rewards points on gas and groceries, so that may be why they are spending more on those items.  And not because they are in financial straits. Let's hope so.

In any case, what are you using your credit card for?

Follow me on Twitter: @JannaHerron

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