May 2, 2007

NEWS: Debit over Credit

According to a new study released last week between credit reporting firm TransUnion and Edgar, Dunn & Co., consumers are showing a marked preference for debit cards over credit to pay for goods and services. Among the respondents polled, 29% prefer debit cards, while 26% prefer credit cards. Furthermore, only 31% added a new payment device to their wallets in 2006, compared with 56% in 2004. The study, which was called The Payment Dynamics 2007 Preferred Payments Study, paired credit reporting bureau information, with consumer survey responses on usage data, as well as preference towards payment methods. Those methods studied included cash, check, credit cards, and debit cards.

The study was conducted online in the last quarter of 2006, and compiled responses from 10,184 individuals who reported either being the major maker of financial decisions in the household, or at least someone who played a significant role. The function of the reporting bureau data was to be sure that individuals from each tier of the credit-scoring hierarchy was represented. Interestingly, those with the best credit seemed to be more likely to pay with cash. Those preferring cash, check, or debit cards tended to fall in the “prime” or “super prime” categories.


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