Debit Cards Rival Cash at Stores

Consumer Reports Money Advisor has a chart in the September issue that details how people pay for their items at stores (it implies this is all stores -- grocery, mass merchants, etc. but that's not 100% clear.) The surprising part to me is how high the amount is for debit cards. The stats including the percentages using each of the following to pay:

• Cash -- 33%
• Debit card -- 33%
• Credit card -- 19%
• Check -- 11%
• Gift/prepaid card -- 4%

My thoughts on these:

1. I don't have or use a debit card, so I was surprised to see it this high -- that as many people use debit cards as use cash.

2. Personally, we use our credit card, the Blue Cash from American Express card, on everything we possibly can. (Doing this made us almost $500 last year.) If you're trying to do the same and make money off your credit card, one key is to charge as much as possible to it. This makes paying by debit card, cash, or anything else undesirable.

3. Checks at 11%? I haven't written a check at a store in about 15 years.

4. The Money Advisor piece goes on a bit and compares credit cards to debit cards. One part I want to highlight is the value of each when it comes to reward programs:

The cash-back, mileage, and other rewards that accompany credit cards tend to be much more generous than debit-card perks.

So far, the Blue Cash from American Express card is the best cash-back credit card I've found to date, and that's why I recommend it. Last year, I earned 1.8% cash back on it and I've yet to find anything close in a single card. Yes, you can take promo rates, switch back from one card to another to another, and so on, but that takes an awful lot of time and effort to MAYBE get a better return. I'll stick with one card that I know works and maximize it to the hilt.

That said, if I found one that performed better, I'd switch. :-)

Comments

[Rob]

I believe Capital One is rolling out a new rewards debit card that can be used at any bank.

Should revolutionize this industry quickly.

[Beastlike]

You mention the reason you wouldn't switch back and forth to credit cards with the best offer is because of time and effort. If you did do this, wouldn't it affect your credit score by not building up a long history or is this overated if you already have good credit?

I got rid of my debit cards because I just felt credit cards are "safer" (more likely to be reimbursed by the bank) if they get stolen and because of cash back on the cc's.....

[Drew Miller]

The 11% checks are from 90% senior citizens. I know of at least one debit card that does have some good rewards, but only when you use it as a credit card (sign, not enter pin).

[Kevin]

Agree with Drew about the 11% checks. The older folks are REALLY hesitant to change. I'm a CPA and had to practically pull teeth to get them to E-file even though it is infinitely safer and faster.

I haven't written a check since moving out of my apartment 2 years ago, and then I was only writing one for rent each month.

[Minimum Wage]

There is a discount supermarket here which accepts cash, checks, debit cards, and state benefit (cash welfare and food stamp) cards. They don't accept credit cards. While a large percentage of customers use cash, debit cards probably represent the largest dollar volume of purchases.

[Jo]

Before I moved to the city, I wrote checks all the time. Now it's all about the debit card. I still write checks out to pay bills and my rent (which goes to my roommate).

I have been typically choosing to use my debit card because a) is convenient, and b)then I don't end up buying tons of splurge items becuase I know that the money is coming straight out of my account rather than on a cc which I have the option to pay off in chunks but have interest (which, yes I know one should pay off the cc each month, but that doesn't always happen!!).

I am amazed it use to be that when I went out with friends to dinner, at the end of the night everyone pulled out their checkbooks or cash, now it's the debit card.

[Rue]

Credit cards make good sense if you pay them off every month AND you get a bonus. I wish I had the discipline to be sure....

I get airline miles for using my debit card and don't have to worry about whether I can pay it off each month, which makes it far preferable for me.

[Susan]

I've gotten into too much trouble with credit cards so I prefer using my debit card (used as credit not debit) or cash. The question I have is, "does everyone feel totally secure paying online?" Hackers are really sophisticated and seem capable of breaking through any firewall or is my thinking antiquated? I'm curious what the consensus is on this. Thanks.

[Mary]

BUT don't those "cash back" rewards come at the expense of others who don't pay their accounts off each month? Do you really think the CC companies are just giving money back to be nice? I for one, don't like the idea of making a buck this way --