Debit Cards: The New, Old Way to Pay

Debit cards have seen explosive growth over the last decade. Debit cards are now used for more transactions than credit cards. Debit cards are moving into new purchase types such as fast food. The young used debit cards more often than the old; but this should not be surprising since most new technology is more heavily used by the young. Debit cards are more heavily used in smaller transactions while credit cards are more heavily used for larger purchases, as is noted in research by Beth Klee (2004). This should not be surprising since people are more likely to borrow for larger purchases or durable goods. Finally, income is a factor in the use of debit cards. In this case, the relationship is not monotonic. Debit use rises with income to a point. Eventually, as income rises, consumers use credit cards more often (Borzekowski and Kiser 2006).