Card issuing banks need to become more creative in how they market and establish various features, or else a growing consumer trend toward debit cards will get even stronger, a new study suggests.

Banks have to think about what their marketing terms really mean to consumers, says Scott Strumello of New York- and London-based Auriemma Consulting Group. Auriemma issued a September report on credit and debit card use that indicates credit cards will continue to fall out of favor with consumers unless some perceptions change.

In addition to conducting interviews with cardholders, Auriemma received responses from more than 400 credit cardholders in the U.S. in a Web-based survey.

"The term 'credit' is a turn-off now because it says I am going to borrow money," Strumello says. "Consumers are leery about borrowing money and going into debt, so it needs to be called something else, like a charge card."

Consumers tend to use debit cards more often than credit cards for "day-to-day" purchases such as groceries, gasoline and drug-store items, and turn to credit cards for higher-ticket items such as appliances, the study says.

Overall, respondents say they use debit cards the most often for monthly purchases, at about 33%, with credit cards close behind at 32%. They say they use cash for about 18% of purchases and checks for 6%. Because of a lack of universal acceptance at this point in the U.S., respondents indicated they have used mobile payments for only 1% of purchases.

Respondents said debit cards "do a superior job" in helping them manage their finances, whereas credit cards are more often considered "helpful in case of emergency."

The study confirms that credit cards have serious competition for consumer spending from debit cards, Strumello says. Even after the Durbin amendment capped debit card fees and some experts predicted debit cards' demise, consumers continue to increase their debit spending, he adds.

"The banks ask why consumers are using debit so much, but they should be asking that question of themselves," Strumello says. "It's possible that their credit card products are fine, but they just are not pitching them correctly."

When credit cards became more widely used in the 1970s, banks were pitching them as a tool for managing finances, Strumello says. Today, they are viewed in an opposite manner — as a tool that allows consumers to spend recklessly and go into debt.

"A lot of consumers feel credit cards are a temptation they don't want to deal with, whereas debit serves a lack of self-control," Strumello adds.

The perception among banks is to target the affluent consumer with credit cards, yet they question why other consumers don't see the benefit in using credit cards, Strumello says.

"They base the credit card on a rewards program, but they are not addressing the financial management concerns of the consumer," he says. "They need a different product configuration."

Deferred debit would be an interesting branding concept for banks, the study suggests, because it would function like a credit card whose balance is paid in full with an automatic deduction from the consumer's checking account.

An advanced variation might call for banks to use credit card authorizations to reduce the available balance in a consumer's checking account, thus assuring funds would be available in the account at payment time.

Consumers might view such a product as a way to manage finances more effectively, making it significantly different than the standard credit cards that banks market today, the study says.

Banks need to change the balance of credit vs. debit usage, especially if interchange revenue continues to fall in light of a federal judge's recent ruling regarding the Durbin amendment fee caps, Strumello says.

"If interchange gets lower, debit becomes a cost and not a break-even proposition and certainly not a revenue generator," Strumello adds.

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