Consumers favor debit to stay away from credit card debt
A new report released by Javelin Strategy and Research indicated cardholders have shown a strong preference in debit over credit so far in 2010. Last year was the first time debit card usage surpassed credit usage in the U.S., a study by the research firm, Pleasanton, discovered.
In 2009, Visa reported the total payment volume for debit cards rose 7.9 percent as credit card usage dropped 7.3 percent. MasterCard also announced a 5.8 percent increase in debit card transactions, Bloomberg notes.
“Consumers are turning from one form of plastic to another,” president and founder of Javelin James Van Dyke told Bloomberg. “Credit cards are falling out of favor as cardholders become more cautious and look for more conservative payment methods.”
Credit-card loan balances at Citigroup, JP Morgan Chase, Bank of America, Capital One Financial, American Express and Discover Financial Services all dropped 20 percent since the second quarter of 2008, Credit Suisse reports. Analysts say part of this is due to tight lending, however, as well.