Debit-Card Use Overtakes Credit

Wall Street Journal reports: 

"The urge to not splurge by thrift-conscious consumers is giving the debit-card revolution a new push. On Wednesday, Visa Inc. reported that the total dollar volume of purchases made using its branded debit cards surpassed credit-card purchases for the first time during the last three months of 2008. 

"The reality is that the vast majority of consumers want to pay as they go," said Stacey Pinkerd, who oversees Visa's debit-card business.

The U.S. government said last month that the personal savings rate rose to 5% in January, the highest level in nearly 14 years. Revolving debt, which mainly reflects credit-card loans, fell 9.7% to $955.7 billion in February, the Federal Reserve said.

"A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment," said Tim Murphy, who oversees MasterCard Inc.'s main payment products around the world.

Unlike credit cards, which have balances that can be carried month-to-month, debit cards immediately deduct funds directly from a checking account. Debit cards are especially popular with younger consumers.

The debit-card business also gets a boost from Americans who got their first card as teenagers a decade or so ago. "As these people move into the family stages and career stages of their lives, the level of their household spending on debit cards goes up," Mr. Pinkerd said."