Consumers have been considerably more cautious about using their debit and credit cards in recent months, and many have even eschewed those accounts in favor of different payment methods in the past year.
New data from Javelin Strategy and Research shows the amount of consumers who carried credit and debit cards shrank last year, and the number of those who had their own prepaid card accounts expanded, according to a report from Bloomberg News. Last year, the number of people who had a credit card slipped to 67 percent of consumers from 74 percent in 2010, and debit cardholders fell to 66 percent from 78 percent. The latter was likely a drop related to many consumers ditching their banks after they saw fees for checking and savings accounts increase in the wake of heavier federal regulation, as the number of people who had a checking account slipped to 88 percent in 2011 from 92 percent the previous year.
And perhaps as a means of making up for the lost debit cards, prepaid card use skyrocketed last year, the report said. The number of people who carried this type of account rose to roughly 13 percent of adults in the U.S., up from 11 percent the year before, and the number of transactions made using those cards jumped 18 percent or so.
"People used to think of them as cards for people who didn't have a lot of money, whereas today they’re becoming much more common for a variety of uses and a variety of demographics," Beth Robertson, director of payments research for Javelin, told the news agency.
However, at the same time, the many consumers who kept their debit and credit card last year have also taken to relying upon those accounts to complete transactions more often, the report said. For instance, First Data Corp. recently found that credit card use rose 5.7 percent on a year-over-year basis in March, while spending on debit cards rose as well. The amount of PIN debit purchases spiked 14.6 percent, and signature debit transactions increased 8.4 percent. Overall, Visa recently reported that spending credit and debit purchases within the U.S. climbed 9.5 percent to a total of $2.04 trillion last year. MasterCard and AmEx reported similar increases in card transaction value, of 11 percent and 13 percent, respectively.
Meanwhile, a separate report from American Banker also suggests that consumers may be starting to move away from banks' traditional bill payment offerings and toward outside companies', as the latter may grant them the flexibility to use more than just a checking account when making a payment. Some now allow users to do so using their credit card instead.
Consumers' attitudes toward credit card use have changed significantly since the recession, as many now use the cards to finance purchases but pay off their balance in full at the end of every month.
