More People Prefer Debits Cards More Now Than Before

There is an increasing trend in the number of consumers saying no to credit cards

. In a country where an average citizen has five credit cards, this certainly is a new way to step into financial freedom.

Why are people using credit cards less?

A growing awareness among the citizens of America about debts and the problems associated with repayment of debts has made them think of leading a life without the stress of credit cards.

Revolving credit is slowing in our economy. In November 2009, the revolving credit fell by nearly 20%, which is by far the largest. (Source: Federal Reserve). This drop has been due to tough lending policies by banks on one hand and consumer's lesser spending, on the other.

However, a complete stop to the usage of credit cards also is not a great game plan as it means not building a credit history. A credit history would be considered should you apply for a loan later on. Even small deals like renting a car or booking a room in a hotel become difficult. Some hotels have a policy not to rent out a room to customers who pay by cash or debit card. A responsible use of credit card can build a good credit record.

A simple lifestyle has become a way of life for many who want to opt out of credit cards. Instead of giving in to the temptation of paying with credit cards to purchase stuff not in budget, people are preferring to lead a simpler life than get into the payment routine.

People who have freed themselves from credit card debts no longer want to acquire new cards or for that matter spend with the old cards even. They want to buy with cash or pay with debit cards. People often are getting into aggressive pay back mode and are clearing their credit card debts realizing that the minimum payments they make will last a lifetime to clear their actual debts.

Debit cards are becoming a payment norm now. By using debit cards, expenses have been controlled by many consumers. In 2009, as much as 28% of credit card consumption has come down, according to a survey conducted by Auriemma Consulting Group. (Source: www.usatoday.com/money)

Notwithstanding the freedom the debit cards offer, there are certain aspects that cannot be ignored using them. The downside of debit cards is the limited protection debit cards possess. You cannot control the expenditure if you lose a debit card. Once your debit card is stolen and is used by the thief to buy something, the money is immediately debited from your account. It would be a while before you fight for this and get money credited back to your account. Meanwhile, checks may bounce and will increase your problems further.

A balance between using credit cards, debit cards and cash is what is expected of you. If you are a wise consumer coupled with calculation and alertness, there is no reason why you should get into credit card debts at all.

by: AndersonCA

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