New reports suggest that while Americans are spending more, consumers have switched their primary payment method from credit cards to cash.
Consumer spending has risen more than 2 percent so far this year; however, credit card companies are not benefiting from the increase.
Visa, MasterCard and Discover have reported declines in the amount of credit card transactions, SmartMoney reports. Increases in activity for the companies are coming from debit use, as transactions with these cards have risen 15 percent this year.
“A lot of people are leery of credit cards and don’t want to fall back into debt – that’s why you’re seeing this migration,” James Brown, professor at the University of Wisconsin at Milwaukee, told SmartMoney.
Another benefit of cash transactions is likely to be seen in the coming months. The Justice Department’s settlement with MasterCard and Visa is expected to provide individuals with discounts for avoiding credit card use. Because of new legislation, consumers could save up to 2.5 percent on cash purchases.
To capitalize on the growing shift, credit card companies, including Chase and Visa have begun to offer $100 cash to new cardholders.