Visa's debit card transactions overtake credit cards
By Seamus McAfee
In an economy that is encouraging more thrifty behavior, consumers are turning to their debit cards instead of their credit cards at record levels, says Visa.
According to an April 29 report from the credit card network, the total dollar volume of purchases made with Visa debit cards at the end of 2008 was larger than the amount spent on credit card purchases -- the first time debit purchases surpassed credit. Visa's 2008 fourth-quarter debit card transactions made up more than 50 percent of the company's volume, compared to 40 percent during the same period in 2003.
"The reality is that the vast majority of consumers want to pay as they go," said Stacey Pinkerd in a press release. Pinkerd oversees Visa's debit-card business.
The reality is that the vast majority of consumers want to pay as they go.
|-- Stacey Pinkerd
Visa's growth in its debit card segment far exceeded analyst's predictions. At U.S. Bancorp, debit card transactions in the first quarter rose more than 2 percent from the same period in 2008, while credit card purchases declined more than 4 percent.
MasterCard also witnessed a major shift toward debit cards, reporting its debit card transactions rose 13 percent last year while credit card purchases dropped more than 2 percent.
Payment cards have long been the preferred purchase method for American consumers, with credit and debit card purchases for retail goods and services outmatching cash and check payments since 2003. Debit cards have slowly approached the levels of credit card use in the 21st century, according to studies by the Federal Reserve.
The switch in payment cards is reflected in debt levels and types of accounts nationwide, with the U.S. government reporting in March that personal saving rates rose to 5 percent in January, the highest in 14 years. Meanwhile, revolving debt from credit cards plummeted more than 9 percent, said the Federal Reserve.See related: Consumer rights for credit and debit cards,5 secrets to smart debit card uses, Debit card rewards programs gaining acceptance, How to turn your driver's license into a debit card
Published: April 30, 2009
- Poll: You can get better credit card terms just by asking – If you want better credit card terms, the best thing to do is call your card company and ask, a new CreditCards.com survey shows ...
- Applications dip, credit market shows signs of cooling off – The market for consumer loans, including credit cards, pulled back in a February survey of consumers ...
- Online and mobile banking statistics – Bank branches aren't a thing of the past yet, but that could be the way they're headed now that consumers can deposit checks, check balances and even open accounts via computer or smartphone ...