Consumers Starting to Shy Away From Debit and Credit Cards, Moving Back to Cash

October 17, 2011
Cleveland Plain Dealer 
credit card news

Americans' obsession with credit and debit cards may be coming to an end, which means cash could reign once again. It has been 10 years since fast-food restaurants began accepting credit and debit cards and since consumers started using plastic more frequently than they were writing checks. But life has changed considerably; consumers are now more averse to debt, some banks are beginning to charge fees for debit card use, and merchants as of October can begin offering discounts to consumers who are paying with cash, check, or debit card -- rather than credit card. "The consumer wants to be back in control of their money," says Kevin Foster, a methodologist at Boston's Federal Reserve Bank. "Cash is just much easier to control." Jean Ann Fox, director of financial services for the Consumer Federation of America, says banks were highly successful at encouraging customers to use debit and credit cards. They offered rewards like airline miles and cash back and threw in comprehensive advertising campaigns. The economic crash of 2008, however, turned the trend around. Banks scaled down credit limits and became more selective about qualifying borrowers for new credit cards; and, now, overdraft and other fees tied to debit cards also are turning consumers off from the payment method. The amount of cash that people keep on their person or in their homes jumped from 2008 to 2009 and are expected to climb further for the 2010 numbers.
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