During the recession, consumer dependence on credit cards decreased while more and more patrons chose to use debit cards or cash.
Be that as it may, on Black Friday the amount of purchases made with credit cards rose 7.4% from last year, whereas payments made with debit cards increased by only 3.4%, First Data reports.
Experts are forecasting that credit card use will continue to rise. An analysis by Javeline Strategy Research predicts credit card payments for online purchases will rise 63% from 2011 to 2016, whereas debit card payments will rise only 2%.
Gerri Detweiler, author of Reduce Debt, Reduce Stress, explains that some consumers may be suffering from “frugal fatigue.”
“People are tired of having to cut back, and that can lead to spending more on credit cards,” Detweiler told USA Today.
In February 2010, the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) took effect, making it much more difficult for those under 21 to obtain a credit card, and thus begin building credit. With the implementation of the CARD Act, the number of credit card accounts opened through colleges and alumni associations fell 17% , according to a Federal Reserve survey.
Emory University sophomore Arielle Fradkin has two credit cards, which are linked to her parents’ accounts. While she has her own debit cards, Fradkin says she does not have her own credit cards because she is still financially dependent on her parents.
“I use my credit cards for bigger things like groceries, school supplies, anything that I think my parents should pay for,” Fradkin said. “I use my debit cards for smaller things like frozen yogurt or coffee, and also to pay for things I order online.”
However, Fradkin does not fall into the trap of charging too much to the credit cards. To her, there’s not much of a difference between credit and debit cards.
“I don’t think I pay less attention to what I’m spending when I use a credit card,” Fradkin said. “My parents always instilled in me the idea that ‘money is money is money.’ It’s not less if I use a credit card, or it doesn’t seem like less to me. I think about all my purchases the same way whether I use a debit card, credit card, or cash. But I do try to pay with my debit cards when possible.”
Emory University sophomore Devin McKissic has three credit cards, each of which are her own. McKissic and her parents decided she should have her own credit cards when she entered college so she could start building credit.
McKissic reserves her credit cards for when she doesn’t have enough money in her checking account to make a purchase. The thought of looming charges makes her uneasy, so she pays for the charges within a week or two.
“I’m just in a mindset where I get really uncomfortable if I maintain any balance on my credit cards,” McKissic explained. “I really only use one of them, but if I buy something on it, I try to pay it off within a week or two.”
With the unstable economy and never ending stories about credit card debt, McKissic, like other college students, always thinks twice before charging something.
“Charging things makes me nervous because you hear a lot of horror stories about people just putting tons and tons of charges on their credit cards and spending way beyond what they can afford,” McKissic said. “They end up with tons of debt, which makes it really hard to get an apartment or house, car, and even a job. I’m careful now to ensure that my future isn’t jeopardized.”