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Americans shifting spending habits from credit cards to debitAccording to research from the TowerGroup, debit card purchases now make up more than half of all noncash transactions in the U.S. - a huge growth from only 1 percent 15 years ago. With the ongoing recession and changes in consumer spending, the company predicts that this growth in the use of debit cards will continue through 2015. Brian Riley, research director for bank cards at TowerGroup, says that because of the current economic climate, many people are pulling out their debit cards to make purchases before any other sort of payment - something he expects will continue into the future as a way for people to buy items with money they already have. "Debit cards evolved from a method for consumers to simply withdraw cash from their bank accounts to a payment vehicle that offers an efficient way to transact," he said. "With direct deposit of payroll and government benefit payments now common, the debit card is even more important to consumers." It should be no surprise that debit cards are being used more often as figures released earlier this week from the Federal Reserve indicate that Americans are turning away from credit cards, perhaps in an effort to reduce their debt levels. According to the Fed, revolving credit - which consists primarily of credit cards - fell $5.3 billion in June. The June numbers meant that revolving debt had fallen for the third straight quarter - a $56.5 billion drop from the end of the third quarter of 2008.
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