People are shying away from the incautious spending that comes with the convenience of a credit card. In 2009, credit cards declined in popularity as debit cards picked up the slack, and that trend is set to continue through the rest of 2010. Apparently people are more interested in getting out of debt than ever.
Consumers Trade Credit For Debit
Bloomberg reports that a California-based market research company, Javelin Strategy and Research, has released a report illustrating that for the first time, payment volume for debit cards has surpassed that for credit. At both Visa, Mastercard, and Discover—three of the world’s largest payment networks—customers are changing from open-ended credit to more conservative debit.
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The Focus Is On Eliminating Debt
The Federal Reserve announced that the country’s revolving debt, which includes credit card debt, declined $4.4 billion this summer, and this new conservatism in payment method is indicative of the larger trend of consumers taking steps to reduce their debt and spend within their means. It’s music to our ears! And even better: It’s expected that this shift to debit cards will be permanent, as many of the users are younger people who appreciate the immediacy and tangibility of debit payments.
Credit Cards Are Necessary, But Dangerous
Pardon our whistling as we type. Americans prioritizing relief from bad debt? Check. Young people making financially responsible decisions? Check. Consumers choosing to spend within their means? What a day! We’re pro-credit card over here, but only because we need to show a responsible credit history to build good credit and be considered trustworthy lenders. And to do that, we have to be fanatic about prompt payments every single month. If you can’t do that—if you’re going to carry a balance and let your bills languish in the recycling bin—a credit card is a risky gamble. But you know what's encouraging? It seems like everyone already knows.
Tell us in the comments: Debit or credit?