Debit card payments will dominate Christmas spending, study says

Debit card payments will surpass the use of both credit cards and cash for consumers' Christmas gift purchases in 2006, according to a survey by the National Retail Federation.

Compare Prepaid Credit CardsThe survey of shoppers, conducted earlier in November, indicated that 39.1 percent of holiday gift spending will be placed on a debit card or check card.  Additionally, 30.5 percent of consumers will put their spending on credit cards, while 24.3 percent will be with cash and the rest on checks.

A National Retail Federation spokeswoman noted that over the past three years, greater numbers of consumers are becoming increasingly comfortable with and relying more on debit cards.  She listed the benefits of using a debit card, such as speed, security and the fact the money comes directly from an account  -- making debit card spending easier to keep track of than with a credit card, where it is easy to lose track of spending.

The federation's spokeswoman added that the move toward a cashless society has made it very safe for consumers to use debit cards and credit cards during the holiday season since they are not carrying around several hundred dollars in cash.

Still, greater debit card use is not a positive for everyone involved.  Retailers explain that post-holiday returns are a little tougher with a debit card since they are dealing with more banks with various rules on returns. 

Regardless, the season should be a good one for merchants.  The National Retail Foundation has predicted that holiday sales will be up 5 percent from 2005, boosting holiday spending to $457.4 billion. 

Separately, the International Council of Shopping Centers in New York foresees 17 percent of U.S. consumers spending more than they did a year earlier, with 56 percent spending the same.  The council foresees, on average, each consumer spending approximately $676 on holiday purchases in 2006, up from $620 the year before.

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Updated: 01-23-2019