More Americans using debit cards ahead of credit - Spokane, North Idaho News & Weather KHQ.com

More Americans using debit cards ahead of credit

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WASHINGTON. - If you are using a debit card to pay for purchases, you're not alone.

More Americans are using debit cards than credit cards now.

For the seventh straight month, consumers reduced their outstanding debt; In August alone, by $12 billion.

The recession, convenience and security of not carrying cash are helping put debit cards on top, but consumers may not be aware bank debit cards may not offer the same protections covered by credit card companies.

Visa says for the first time in the company's history, debit card transactions now top credit cards.

"Within Visa USA, over 70 percent of Visa systems done on debit cards and over half of dollar purchases are debit cards," said Stacey Pinkerd of Visa Global Head of Debit Products.

A shift from a "charge it" to a pay-as-you-go mentality, along with the convenience of not carrying cash."

"I do use my debit card more because I don't like running up my credit card more," said one shopper.

Experts say many consumers do not know there are huge differences in protection for debit cards offer, verses credit cards.

Credit card companies are bound by the fair credit law.

"So for example if it's lost or stolen, someone uses it the wrong way, you have to settle a dispute, you have the law on your side. With a debit card you're not backed by any laws, just policies," said CNBC Personal Finance Expert Carmen Wong Ulrich.

Policies the banks set, not the company, emblem like MasterCard or Visa on the card.

Visa says it works with banks to offer the same dispute protections to consumers.

Banks have come under fire for the soaring overdraft fees that apply to debit transactions, as high as $39 per overdraft recently some banks adjusted that policy, allowing customers to opt out of overdraft protection.

"If you opt out your card is declined which is what you want to happen. This way, yes ok you cant make your purchase but you're not going to get hit with $39," said Ulrich.

Experts say when it comes to big purchases, like electronics or holiday gifts, use a credit card and budget to pay the bill off in a month.

Congress could take up the issue of overdraft protections.

A proposed bill would require banks to make give customers a choice to opt in on overdraft protection and alert them of a pending overdraft.

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