Since October of last year, the Federal Reserve has been considering a proposal to lower the maximum interchange fees on debit cards. You can read the Fed’s press release here.

If the regulation passes, issuers will have to adapt.

To this end, we looked at our data (and in the spirit of what we do, collected a lot more) to help answer the question of why some credit worthy consumers prefer to use debit over credit.

First, let’s size this population.

• 22% of consumers with FICO>659 prefer to use Debit cards over Credit Cards
• An additional 25% of these consumers prefer to use Debit and Credit Cards equally
• So in other words, as many as 47% of U.S. consumers with good credit choose to use Debit over Credit for some or all of their transactions.

This is a big population and begs the question of what motivates this behavior. 

While the exact answer may be nuanced for a given individual, across aggregated segments there is a clear answer – and that is fear and worry of getting into debt.

The exact framing of this concern may vary for different people.

Here are the top 3 interconnected reasons provided by consumers:

• #1 With a debit card, I can only spend money that I have
•  #2 I feel that I am a more responsible spender when I use a debit card 
• #3 I don't want to pay interest fees associated with a credit card

And as you would expect, there is some nuance by generation.

• Gen Z are more likely to be explicitly worried about getting into debt
• Millennials & Gen X are more likely to be weary about interest fees
• Meanwhile Baby Boomers are more likely to think a Debit card is more secure than a Credit Card

And in case you are wondering about the lowest ranking drivers to Debit Card usage, here they are:

• #8 I don't care about credit card benefits, such as travel perks, shopping perks, etc. 
• #10 I don't care about credit card rewards

Given the above, there is a path forward for product teams to engage Debit users with innovative Credit strategies. The key is in developing practical benefits that adequately address the underlying money management concerns.

Needless to say, we are inquiring minds, and as such continue to mine our vast data and collect even more information on every credit and debit card strategy & innovation that can help address this need.