Two Main Reasons Why Consumers Are Using Debit Cards Instead Of Credit Cards
Outstripping Credit Cards
Reports show that debit cards are the newest craze in the financial/money industry. More and more consumers are halting their spending using credit cards and switching to use a debit card.
Cancelling a credit card or two is becoming a fast-moving trend that is sweeping the nation. Instead of buying now and paying later, consumers are only buying now what they can pay for now. Debit card use is already beginning to surpass credit card use.
Consumers are using debit cards instead of credit cards for two main reasons:
1) Debit cards provide a reliable budgeting tool that significantly reduces spending.
2) Some consumers are using debit cards more because they can’t be approved for a credit card in such a tight credit crunch.
Whatever the reason, debit card use is sure to surpass and outstrip credit card use. Here are a few statistics for you.
-Debit card spending is expected to increase by 13 percent by the end of 2008.
-Credit card use is expected to increase only by 3 percent.
-Debit card purchases are expected to reach $1.2 trillion by the end of 2008.
-Compare that figure with the $1.9 trillion expected to be spent using credit cards.
The growing number of debit card use is definitely bittersweet for banks and other financial institutions. Debit cards to not present the same risk that credit cards do. Consumers can only spend what they have in their account when they use debit cards. On the other hand, debit cards are not nearly as profitable as credit cards because credit cards are associated with high interest rates and fees.
Banks will find a way to benefit more from the rising number of debit cards that are being used. They always do.
What are your plans for the future? Which plastic will you find yourself pulling out more often? Debit card or credit card?
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