Debit Beats Credit With Bridge Millennials

Debit Beats Credit With Bridge Millennials

Would you pay interest on a cup of coffee? Not willingly – unless you use a credit card at the POS terminal, that is, in which case you’ll pay the retail price plus 21 percent. Cover just the minimum due for a few months, as can happen, and boom – you’ve got the beginnings of a credit problem. It’s an easy trap to fall into when spending the bank’s money before your own.

Multitudes of Americans woke up and wised up to the true nature of credit after the Great Recession, driving a surge in the use of debit cards. Older “bridge millennials” led the way when it comes to living within one’s means by showing a clear preference for debit products. PYMNTS probes this fascinating topic in the inaugural Next-Gen Debit Tracker®, a PULSE collaboration.

Emerging trends in debit usage reveal lines of demarcation between various consumer groups and generational cohorts, along with deeply held beliefs about money that are just now coming into focus. Recent research shows that mobile wallets are more likely to have debit cards loaded than credit, tracking with popularity among millennials even more than Gen Yers. There are many other such indicators demonstrating a taste for debit, as explored in the new Tracker.

Safe, but Not Immune

Why all the debit love? That’s easy: You can’t overspend, at least not more than standard overdraft protection allows. Debit is the penultimate spend management solution, and that simple fact explains its allure, especially in the wake of a global financial meltdown.

In other ways, debit has the same drawbacks as credit, especially when it comes to fraud. EMV cards have lessened ATM skimming attacks on debit cards, for example, but cybercrooks never sleep. There are also the rails to contend with, as the Federal Trade Commission (FTC) recently had Visa and Mastercard under the microscope for issues around debit card routing.

Even with card skimmers slowly exiting the equation, debit cards are still prone to fraud, as card-not-present scams still pervade the eCommerce space and often go undetected for longer periods of time.

The PULSE payments network, a subsidiary of Discover Financial Services, is one of the top three debit/ATM networks in the U.S., and its DebitProtect® product is configurable for customized fraud mitigation, with dedicated fraud analysts to provide additional decisioning power.

Debit Gets an Upgrade

Getting approved for a credit card and having one’s line of credit increased always gives people a celebratory feeling, as they imagine trips they’ll take and stuff they’ll buy. But without strong financial discipline, open lines of revolving credit can cause big problems, as we’ve seen.

Injury turns to insult when card crooks get their mitts on card digits or magnetic strip details and further complicate a messy situation with cybertheft. Since debit cards connect directly to deposit accounts, those hacks place attackers even closer to a consumer’s own funds.

There’s still plenty of risk in the debit proposition, but new biometrics and countermeasures are keeping debit a safer haven for frugal card users.