Visa has noticed the trend of increased debit card use during this recession. They're running several TV ads that promote Visa debit cards for everything from buying pizza, going to an aquarium with your daughter on a Tuesday, and paying for products online.
On April 29th, Visa Inc. reported that their branded debit card total dollar volume of purchases surpassed credit card purchases for the first time during the last three months of 2008 - making the debit card transactions processed by Visa 50.4% of their total transaction volume in the same period.
It's no mystery why consumers are turning to debit cards over credit these days. Consumers are becoming more conscious of their spending, and people don't want to rack up any more credit bills if they can help it. Debit cards are popular over cash use, because American consumers have a preference for the convenience plastic provides - beginning in 2003, credit and debit card purchases bypassed cash and check purchases.
"A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment," said Tim Murphy. Murphy looks after MasterCard Inc.'s main payment products.
Unlike credit cards, which allow consumers to charge more than they can afford to pay when the statement comes and carry the balance from month to month, debit cards only let you spend what you have in your checking account. A Nilson Report provides data for the increase of debit cards since 1987:
Banks are helping to encourage debit card use through the offering of rewards programs. While debit card rewards programs are not as generous as most credit card programs – it's still a good incentive that helps people choose debit over credit. Credit card use is expected to decline even more, as Americans continue to monitor and rein in their spending habits.