Subprime borrowers more likely to use debit than credit
A new study has found that subprime borrowers use their debit cards far more often every month than superprime consumers, who are more apt to take on credit card debt.
According to a study from MasterCard, which also cited third-party findings from Lightspeed Research, the amount consumers spend on their debit cards, and how much they use them, is closely tied to their credit score. The lower their rating, the more often they use the card.
The study found that borrowers with a credit score below 650 use their debit card an average of 28 times per month, and spend a total of $860. These consumers make 73 percent of their card purchases on debit. However, those with scores above 720 use their cards just 11 times a month to spend an average of $324 and use credit for 72 percent of their card purchases.
As credit card companies have tightened lending restrictions in recent years, many subprime consumers may have had trouble obtaining a line of credit, which could explain some of the data found by MasterCard.