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Debit Cards Overtake Credit

A surge in debit-card usage reflects a shift from the days of easy credit

By Clay Dillow, Newser Staff

Posted Apr 30, 2009 8:35 AM CDT

(Newser) – The recession has boosted the popularity of debit cards, the Wall Street Journal reports. In the last quarter of 2008, debit-card transactions processed by Visa were 50.4% of the company’s volume, surpassing credit cards for the first time. Rival MasterCard’s debit volume surged 13% last year as credit-card volume declined 2.2%. Consumers seem to prefer the pay-as-you go model to the rising cost of maintaining credit.

The US government also reports that the personal savings rate was up 5% in January while revolving debt, which largely represents outstanding credit-card balances, fell 9.7% in February, an indication that Americans are trying to shed their debt and spend money already in the bank. “The reality is that the vast majority of consumers want to pay as they go,” one Visa exec said.

[Images (2)]

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Debit-card use has been catching up to credit cards for years, and the pay-it-now aspect seems to be particularly appealing during the recession. (AP Photo)

Debit card use has been catching up to credit cards for years. (AP Photo)

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A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment.
- Tim Murphy, overseer of MasterCard Inc.'s main payment products

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COMMENTS

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Showing 3 of 3 comments

wwwonderer

Apr 30, 2009 4:22 AM CDT

I used to be in the habit of paying the balance to zero every month. Ther was a long time whn my cards made ZERO dollars in interest on me.

nick

Apr 30, 2009 2:52 AM CDT

Credit card companies do perform one worthwhile service: convenience! I have one card (Chase), and I pay the balance off every month. They accumulate my reward points based on the amount I charge, so every so often I redeem them for cash ... they mail me a check! Such a deal: They're paying me to use their card.

Derni

Apr 30, 2009 1:57 AM CDT

Credit card companies have taken advanyage of the public-Chase has been terrible with handling my request-I suggest people keep away from Chase bank -They gave me a good rate on transfer balances and then said that the $1000 on my regular acct could not be pre-paid the rate on this was 13%is the higer rate-so all my payments are aplied to the lower rate and I can't pay off the higher rate-I will get rid of both chase cradsa and use my debit-

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Wall Street Journal (Source Grid »)

Debit card use pushes Visa profit up 71% in fiscal Q2
Bloomberg

Visa beats forecasts after curtailing expenses
Reuters

Money

recession • debit card • credit card • Visa • MasterCard • financial crisis

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Debit Cards Overtake Credit