Will that be Debit or Credit?

Recent research is indicating consumers are more comfortable using their debit cards rather than credit cards. In fact, according to a TNS Financial Services Consumer Credit Card Program Study, a whopping 60% prefer debit to credit for their purchases as debit feels more like "real money."

Debit card usage has increased quite a bit across households in the past 3 years. Debit cards with rewards programs tied to them are used by 57% of households rather than credit cards with rewards programs associated. While household income does not appear to be a significant player in debit card reward users, age does. 73% of users who participate in debit card rewards programs are 35 and older.

What this means? Banks have a huge opportunity to continue this upswing by associating more rewards with debit cards. Interestingly, while many users factor and/or are aware that banks have awards associated with them, a small percent actually capitalize on them, making it a no-brainer for banks. Truly, it is a win-win for banks: increase brand loyalty as well as affinity for debit card usage while drawing payment directly from the user's funds already in their account(s).

While debit cards now factor about equally to cash for in store purchases (both hovering around 33%, according to the 2005/2006 Consumer Payment Preferences Study from the American Bankers Association), debit cards are really seeing traction in the form of online payment. In fact, Jupiter Research is forecasting that 46% of online purchases will be in the form of debit by 2010, up from an already impressive 41% today.