The number of Australians switching to debit cards in lieu of credit cards is increasing steadily. A few of the reasons for this increase include large credit card fees and high interest rates, thus people prefer using their own money rather than buying on credit.
Do Australians Prefer Debit Cards Over Credit Cards?
There is plenty of evidence that the use of debit cards is rising, while less Australians are using credit cards. The attraction of knowing that you’re not increasing your debt levels when you buy something, coupled with the convenience of being able to access cash makes the allure of debit cards a stand-out option.
Credit Card Usage Drops
The use of credit cards has dropped almost 17 per cent over the last year and now makes up a mere 42 per cent of payments processed through cards. This trend is largely due to debit cards which allow card holders to use their own money while having the same flexible access to funds offered by credit cards.
Debit Cards Gaining Ground
The usage of debit cards has increased by more than 30 per cent in the past year alone as Australians prefer to rely on their own funds instead of purchasing on credit. Unlike credit cards, there are no fees associated with debit cards and there is no interest charged whatsoever.
This migration towards debit cards is largely due to the high interest rates currently being charged as well as the large fees credit card usage incurs. Since debit cards draw on existing funds there are virtually no fees involved. If there isn’t enough money in the account, the transaction will simply be refused.
Check Your EFTPOS Limit
Most retailers have been processing debit card transactions as if they were credit cards meaning that they have been charged merchant fees for each transaction. However, recently Woolworths has begun processing all debit card transactions as EFTPOS (Electronic Funds Transfer at Point of Sale) transactions. This means that the retailer has essentially transferred the cost of the transaction to the customer.
While there will be little impact on debit card usage, it is still wise for customers to know their bank’s fee structure and the number of free transactions they have every month. This is because if the majority of retailers make this shift, then each transaction will count towards a debit card holder’s monthly EFTPOS limit. Once this limit is exceeded customers could potentially be charged a few for the use of debit cards.
However, some banks offer accounts with unlimited EFTPOS transactions and customers should check if they have such an account. With over 275 million card transactions being conducted on a monthly basis all over Australia and more than 150 million of these being attributed to debit cards, it is likely that more banks will begin to offer better EFTPOS conditions to their customers.
