Give us a little credit.
Actually, give us a lot of credit. After credit card use dropped in the first flush of the recession, it has again topped debit use, growing 8.2%, 9% and 10.6% in the first, second and third quarters of 2011, respectively.
It's no surprise, considering that banks have upped their recruitment efforts, increasing their credit card mailings 85% since the beginning of 2010.
And how could we forget the ways they've tried to make debit unappealing in recent months, with their attempts to levy outrageous debit card fees and cancel or downgrade debit card rewards.
Why all the effort to push people toward credit cards? Because banks get a larger portion of the transaction when consumers use them.
It's Been Credit vs. Debit for Some Time
Consumers' conscious avoidance of credit cards was largely an effort to eliminate or prevent debt during unstable economic times. An October law (the Durbin Amendment to the Dodd-Frank Act) limited the money banks earned off of each debit card transaction, and banks subsequently took an enormous revenue hit. So they tried to make up for their losses by instituting the above-mentioned fees, which were so unpopular with consumers that the banks had to revoke them.
Unable to supplement their revenue with the larger fees, the banks have instead tried to direct consumers to using credit cards, which not only give banks 2% of each transaction, but also hold the promise of interest from overdue payments (not that we would know anything about carrying a balance on our cards!).
Not That Credit Use Is a Bad Idea
Using credit cards is not necessarily a bad thing—it just needs to be done right. Handling of credit cards is an important factor considered in your credit report and score, which help lenders determine your financial trustworthiness.
We'll take that credit.