Debit Cards

Visa Debit Cards More Popular Than Visa Credit Cards

Are people falling in love with their debit cards?

During the quarter ending December 31, 2008, people made $203 billion in purchases using their Visa credit cards.  During that same period, people made $206 billion in purchases using their Visa debit cards.  (You can read more by viewing Visa’s latest SEC Filing.  These figures are for U.S. purchases only.)

Also, during the year 2008, the number of credit cards in use rose 2%, from 706 million to 813 million, as compared to the year 2007.  Over that same time, the number of credit cards in use rose 14%, from 795 million to 905 million.  (These figures appear to be for world-wide use.)

Either way you look at it, debit cards are becoming more popular.  I stopped using my credit card four years ago, and I do not miss it.  I’ve managed to reserve hotel rooms with my debit card, and I’ve even researched how to rent a car with a debit card.  My current bank treats debit card transactions with the same security as credit card transactions.

As debit cards become more popular, I’m sure that debit card-related fraud will increase, as well.  Such is the nature of how the world works.  No matter the system, or mechanism for transferring money from one party to another, there are those who will find ways to manipulate that system or exploit that mechanism.  Keep this in mind when you use your debit card.  Be careful.  Be mindful.  Be smart.

I am not sure if this move towards debit cards is short term – driven by the recent downturn in the economy – or long term – signaling a move away from credit and towards paying with cash-on-hand.  It will be very interesting to take a look at Visa’s next SEC filing, to see if this is a trend, or a one-time blip.

What about you?  Are you using your debit card more than you used to use it, as compared to your debit card?  What are you worries when you use your debit card?  Do you use your debit card for online purchases, and if you do, do you feel comfortable when doing so?  Do you know your bank’s debit card security policies?

5 thoughts on “Visa Debit Cards More Popular Than Visa Credit Cards

  1. For me, using a debit card is essentially the same thing as using a credit card since I always pay my credit card immediately anyway. As long as I don’t use cash, I’m OK- I need the accountability of seeing that purchase show up on the statement again, and I track my spending by using those purchases since I can’t seem to hang on to receipts.

    But, for those who are apt carry credit card balances, I think that the increase in credit card uses is a good thing- as long as it doesn’t just reflect the fact that peoples credit cards are tapped out and/or that they can’t get any more credit in this credit crunch. The penalties for going over the limit on a debit card are a lot more severe than the penalties for going over the limit on a credit card, so if people are using debit cards only because of a credit crunch, then this could be a bad thing for them unless they are really able to manage their money so they don’t overdraw their bank accounts.

    Debit cards definitely used to be a better/more helpful tool in the time before they just let you overdraft your account and charged you fees for the privilege.

  2. I read somewhere, maybe here, that when you use your Check Card (Debit Card w/ Visa Logo), you should choose the “Credit” option (sign) rather than the “Debit” option (PIN) as this will afford you the Fraud / Merchant screwup protection that a credit card provides. Supposedly, using the “Debit” option does not carry the same benefits.

    I do this regularly. So are my purchases included in the “Credit” card total or the “Debit” card total?

    Can anyone verify the Credit/Debit points above?

  3. We moved away from using credit cards when our mortgage company ended their rewards program. We have one card that we use for travel (especially helpful when renting cars).

    We use cash allocated to specific categories (envelope system) for nearly every purchase and this has truly made a huge difference in our spending habits and has reduced the chance of our debit card being compromised at a store or restaurant. We have been using cash for several months now and it is refreshing not to have a cc bill each month.

  4. I think that a credit card for anyone is a bad thing. But a debit card is fine, as long as a budget is set and followed.

    Another way, for me, is to get my kids prepaid cell phones. I don’t mind paying up front for the minutes and not have a long term contract eother.

    I got a Tracfone for $30 that cam with an equal amount of minutes so the phone was kinda-sorta free.

  5. As I read this article, I was wondering the same thing as Brumby (#2).

    @NCN: BTW, I think you meant “debit” instead of credit in the second sentence of the second paragraph… “Over that same time, the number of credit cards in use rose 14%…”

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