As people all over are in the final dash of the holiday shopping season it is wise to remember that your debt card is still plastic.
Increasingly, people have come to believe their debit card is the sweeter answer to credit. Credit card use is at an all-time low as people turn to debit cards, according to Javelin Strategy & Research. Debit transactions have grown 10 percent from 2008 to 2009, reports Pulse, an ATM/debit network.
As the theory goes, a debit card is considered the good plastic.
Forty-three percent of holiday shoppers will use debit cards as their primary form of payment, up 20 percent from five years ago, according to the National Retail Federation. Only 28 percent of shoppers will be using their credit cards, the lowest level since 2002.
When people pay with plastic, they don't see their money being handed over. Many consumers don't do the same mental accounting they might do if they have to peel off actual paper money, researchers have found.
Still, people have come to believe that a debit card is the same as cash. It's not. Thanks to a feature called overdraft protection, a debit card is not the same as using cash if your financial institution will cover you when your account is short. Of course, that service will cost you.
That’s where you need to be careful. If you put yourself in the mindset that your debt card is cash and don’t fall into the overspending trap you can disregard this article. But, research says that too many of you don’t so thus the friendly reminder.