Credit Cards Gaining on Debit Cards for Small Purchases
Credit card usage is making some headway, and gaining on debit card usage overall. For in-person purchases under $5, credit cards have been becoming the go-to for consumers, according to a new report from CreditCards.com.
Among credit cardholders, 17 percent indicate that they most frequently use a credit card for small transactions, higher than last years mark of 11 percent. As previously mentioned, this rise in credit card popularity is at the expense of debit cards and cash, both of which saw an overall three percentage point drop in the last 12 months.
Baby Boomers and the Silent Generation overwhelmingly reach for cash in these circumstances, as opposed to 43 percent of those under the age of 53. As a whole, small cash purchases are down 10 percentage points since 2014.
“If you pay your balance off in full each month, there’s no reason not to use credit cards for these small everyday purchases,” said CreditCards.com senior industry analyst Matt Schulz. “They’re convenient, they’re safe, and over the course of a year, all of those little cash and debit card payments can add up to a real missed opportunity to collect cash back rewards.”
Credit cardholders opt for their credit cards more often for bigger purchases. As a matter of fact, nearly 3 in 5 report that they prefer to charge a purchase totaling over $500, compared to 24 percent who swipe a debit card, 10 percent who pay with cash and 8 percent that fill out a check.
“Big purchases are a great chance to rack up credit card rewards, as long as you do it responsibly,” Schulz said. “Save up for what you want, then sign up for a new credit card to pay for it. If you’ve got good credit, it’s an easy way to bring down the real cost of these big-ticket items.”