These new findings are courtesy of TransUnion. The credit reporting agency analyzed data and discovered that the past due rate for members of Gen Z with auto loans is currently 2.21 percent. Before the pandemic, the rate was approximately 1.75 percent. Millennials have also been struggling to make auto loan payments. Pre-pandemic, their past-due rate was about 1.66 percent, compared to 2.14 percent, the past due rate among millennials at the time TransUnion’s research concluded.

Studies show Americans favor debit cards over credit cards

On behalf of NerdWallet, in 2017, Harris Poll surveyed more than 2,000 adults in the US to learn about credit card and debit card usage. The results of the study indicated the following:

  • 44% of Americans report typically using a debit card for everyday expenses, such as groceries and gas
  • 34% of Americans make such everyday purchases with credit cards
  • About 71% of Americans who report primarily relying on debit cards to make everyday purchases have been in credit card debt at some point in their lives or are still currently in credit card debt

Studies show Americans favor debit cards over credit cards

That final point may explain why a relatively large number of Americans prefer to use debit cards over credit cards when basic daily purchases. Someone who is in credit card debt now or has been in the past may understandably be wary about relying too heavily on credit cards to cover daily expenses. They may feel it is safer to use a debit card instead of running the risk of worsening an already stressful financial situation. That said, it’s worth noting that the Harris Poll study also revealed how some Americans fall prey to various misconceptions regarding the manner in which debit card usage may impact their credit score.

Specifically, about 24% of Americans who participated in the survey incorrectly believe that purchases made with a debit card will have an influence on their credit. This may provide them with an erroneous reason to use a debit card more often than a credit card. If they assume that smart debit card usage will boost their credit score, they may be more inclined to use a debit card instead of a credit card when they know they have enough money in their account to make a given purchase. This isn’t to say that using a debit card can’t have a positive impact on one’s financial circumstances in other ways. For example, some innovative debit cards now allow users to “round up” their daily transactions to make payments towards car loans, save money to invest, etc. Consider this scenario: perhaps someone uses such a debit card to purchase an item that costs $19.50. They could theoretically round the cost up to $20.00. The extra $0.50 left over could be deposited into a savings account or automatically used to make an important payment.

As these types of debit cards and fintech services become more prominent, it is likely they will further impact the extent to which Americans choose debit cards over credit cards. Although, when used safely and strategically, credit cards have the potential to help consumers improve their credit, providing them with access to a range of financial opportunities that might otherwise elude them, it appears debit cards are becoming increasingly useful as a means of helping Americans avoid and even get out of debt. This highlights the need for further research. While the study conducted by Harris Poll for NerdWallet offers some helpful insights into American consumers’ credit card and debit card usage habits, there is a good chance that these trends will change and develop in the coming years as more Americans familiarize themselves with the various types of debit cards they can use when making both minor and major purchases. Perhaps another study conducted in a year or so will reveal that even more Americans prefer debit cards over credit cards thanks to the new advantages they are offering.

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