U.S. consumers are more likely to pull out their debit cards when making purchases, according to a news story from The New York Times. Since the onset of the economic recession, U.S. consumers' use of credit has dropped significantly, both in the the number of transactions and the total amount spent.
Debit cards are reportedly now used for 50 percent of all non-cash sales, though they have a lower average dollar amount per transaction, according to research from TowerGroup, a subsidiary of MasterCard Worldwide. But debit card sales continue to dominate small purchases, TowerGroup says.
Brian Riley, a TowerGroup research director, says debit use was increasing before the the recession, but usage has been accelerated by the downturn:
 | It certainly happened faster. People have less credit, things have tightened up. |  |
A TowerGroup study shows that in 1990, debit cards were used for just 1 percent of all non-cash transactions. Today, more financial institutions offer debit cards that are connected to major card networks like MasterCard and Visa, which also is accelerating growth in usage, Riley says.
The advent of direct deposit also has played a role. Seventy-two percent of all U.S. salaried workers now have their paychecks sent directly to their bank accounts, while 92 percent of all U.S. government workers have their checks directly deposited — making debit cards easier for people to access their money without paying ATM fees.
Debit use is expected to be boosted by increasing governmental oversight of credit as well as the growth of smartphone and contactless payment applications.
