Debit card use is declining in the U.S., according to new report from ValuePenguin. Since 2013, the percentage of households that use debit cards has dropped from 74 percent to 58 percent, in favor of alternative payment methods, such as credit cards and online/mobile banking. Almost a third more households pay with credit now compared to five years ago.
New Jersey, Connecticut and Hawaii are among the states that have seen the sharpest decreases in debit card usage. South Carolina and North Dakota have seen the least change: Only 4 percent of households there have stopped using debit.
Many consumers prefer credit cards because they provide benefits that debit cards do not, namely cash rewards and enticing perks. The Chase Freedom card, CNBC Make It’s No. 1 pick for the top cash back credit card, can earn users hundreds of dollars each year. The Chase Sapphire Reserve, meanwhile, our runner-up for the best travel card, can save you money and offers, among other perks, complementary lounge access in over 1,000 airports throughout the world.
Credit cards also offer an extra measure of protection. “Debit card spending is reflected instantly in a user’s bank balance, while credit card expenses can be canceled in case of fraud or theft,” reports ValuePenguin. If you report an unauthorized transaction on your debit card within two days, you could still be liable for up to $50. If you wait longer but report it within 60 days, you could be liable for up to $500.