By Tanner Corbridge
While credit card companies continue to bombard college students with advertising strategies and campus promotions, debit cards are becoming increasingly popular with the nation”s undergrads.
According to a Student Monitor LLC survey of more than a thousand full-time undergraduate students, debit card ownership among college students has almost doubled from 30 percent to 57 percent in the past four years. During the same time period, awareness of debit cards increased from 87 percent to 93 percent.
Stacey Pinkerd, senior vice president of Visa USA, said the reason for the growing use of debit cards is simple.
“It”s clear consumers are responding to new payment choices like debit because it is more convenient than writing a check, safer than carrying a lot of cash, and it”s a good budget-tracking tool,” he said. “Consumers are very convenience-driven, and we expect that debit usage will continue to grow for years to come.”
A report recently published by Visa USA supports the findings of the Student Monitor survey. The report showed that debit card transactions exceeded those of credit cards for the first time in the U.S. during the first half of 2002 – even though there are twice as many credit cards as debit.
“We”re finding that debit card usage is growing dramatically, and we expect that trend to continue,” Pinkerd said. “Credit card usage still continues to grow as well, but I think that consumers look at those two products very differently.”
The fact that debit card usage exceeded credit is especially impressive considering there are more than one million credit cards used in this country – four for every man, woman and child.
Pinkerd said that more and more banks across the country are not holding consumers responsible for fraudulent purchases made on debit cards, contributing to their increased popularity.
Last year Americans charged more than $400 billion on their credit cards, according to RAM Research, a credit-card tracker. With interest rates normally between 18 and 22 percent, Americans paid over $50 billion in finance charges last year-enough money to buy the Nike Company, with $35 billion to spare.
In addition, the credit-card trackers show the average American carried $5,800 on their cards from month to month, paying an average of 18.3 percent in interest. That amounts to $929.70 a year in interest payments – payments that more students are trying to avoid with the use of debit cards.
“Debit is really more appropriate for the more everyday types of purchases and that”s typically what it is being used for,” Pinkerd said.
Current credit card debts in the US total about $360 billion. As consumers, Americans are now more in debt than the government-not a flattering comparison according to financial experts.
“I always have to be aware of how much I”m spending with my credit cards to ensure I never get in over my head,” said Brian Swenson, 23, majoring in finance. “Those who don”t keep track can get caught in the debt-trap, and it kills them.”
Another type of credit card, the so-called “one card,” is gaining popularity among college students and perhaps swaying students away from credit card debt.
BYU”s version of the card, known as the “Signature Card,” serves as a debit account and as a university ID card.
Surveys show that nearly 12 hundred universities across the country operate one-card programs allowing students easy access to dining services, bookstores, retail outlets, vending machines, ticket offices, and computer labs.
According to the Student Monitor survey, debit cards are now the second most popular form of payment with college students, trailing only cash. Experts expect one-card programs like the Signature Card to continue growing because of the growing use of debit cards among students.