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Banks Promote Credit Cards Over Debit Cards

Remember this Visa commercial from 2006-07:

Now, watch this 2011 commercial:

Do you notice the shift? In 2007, banks pushed debit cards. They mentioned "debit" since the emphasis then was speed and convenience. The newer commercial never uses the word "debit." Why?

Now that swipe fees have been reduced and banks see the difficulty in charging consumers monthly fees for debit cards and checking accounts, the push seems to have shifted back to credit cards -- where the banks can make more money.

During the last four years, consumers have switched from credit cards to debit cards as they pay off their debt. Bloomberg News reported:

"Consumer credit in the U.S. unexpectedly dropped in August by the most in over a year. The $9.5 billion decrease followed an $11.9 billion increase the previous month,.."

And, consumers are paying off other debt too:

"Non-revolving debt, including educational loans and loans for autos and mobile homes, dropped by $7.23 billion in August, the biggest decrease since Aug. 2008. Revolving debt, which includes credit cards, fell by $2.27 billion."

Sure, this is affected by unemployed consumers and consumers who lack confidence in the economy. My point: decreasing debt affects the banks' ability to make money.

It would seem that banks now want consumers to go back to the way it was, since banks can make money from interest charges on credit cards. I would advise consumers to pay with the payment method that best suits your needs, not the banks' needs. Keep paying off your debt, too.

Will you switch back from debit cards to credit cards? I won't, and I hope that you won't either.

Comments

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I want to hear some explanation regarding the promotion of credit cards over debit cards. For sure debit card users are also interested to hear it.

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