Lending

Filene Report Shows Increased Debit Card Use

Almost two-thirds of U.S. households now use debit cards.

October 22, 2010
KEYWORDS cards , credit , debit , filene , report
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Plastic cards tie consumers to their financial institutions. This is good news if your credit union offers debit and credit cards to members.

 The past two decades have seen a rapid rise in credit and debit card use, according to a Filene Research Institute report, “Debit or credit: either, both, neither, or how much?”

Specifically, the number of credit card transactions per U.S. resident grew from fewer than 20 in 1990 to more than 80 by the mid-2000s—or from once every three weeks to once every four days.

 

'The new payment mix is more about market share than about which payment dominates or will dominate.'

 

The number of debit card transactions per U.S. resident grew even faster, from one in 1990 to 118 in 2009—or from once every year to once every three days. 

"The new payment mix is more about market share than about which payment dominates or will dominate,” says Ben Rogers, Filene research director. “Credit unions care deeply about whether consumers use debit and credit cards.” In addition to the loyalty they create, plastic cards are among the few revenue centers credit unions can influence, he says.

Debit cards are in use in 71% of American households, but only 19% of consumer households use them as a primary payment method, according to the report. This research indicates as income and net worth increase, so does credit card use. This might be the vestige of a system of loose credit and attractive credit card rewards.

But if the new credit card rules substantially limit the rewards companies offer to cardholders, says the report, debit use could catch up. If not, the economic advantages of nonrevolving credit card use could keep credit cards at the top of the payment heap for middle- to high-income consumers. Credit cards are a mature product, entrenched but unlikely to surge ever again.

Next: Other report findings

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