There’s a pretty good chance the last time you paid for something, you did it with a debit card.
Debit cards were the No. 1 payment method Americans used in 2016, the most recent year for which data was available, according to a report released this week by The Nilson Report, a company that analyzes the card and mobile payments industry. It analyzed data from the U.S. Bureau of Economic Analysis.
Consumers made nearly 68 billion transactions on debit cards in 2016, The Nilson Report found, followed by cash with nearly 49 billion transactions and credit cards with about 34.6 billion transactions.
Credit cards were third even though they receive a lot of headlines for their often generous rewards. They also have far more generous rules regarding liability and stolen cards than debit cards, most of which cap liability.
As cash becomes less popular around the world, cards, including debit, credit, prepaid and electronic benefits transfer (EBT) made up nearly 61% of payment volume in 2016, The Nilson Report found. That will grow to more than 69% by 2021.
In 2016, consumers for the first time spent more in terms of monetary value on credit and debit cards than they did in cash, according to the research firm Euromonitor International.
Although the use of cards is growing, cash “continues to hold its own,” said David Robertson, the publisher of The Nilson Report.
“Changing ingrained habits is not something that is easily overcome,” Mark Ranta, the head of digital banking solutions at ACI Worldwide
told MarketWatch. Many consumers prefer cash because don’t want all their transactions to be traceable, he said.
Some consumers use cash and debit cards to avoid debt. That can pay off for consumers, especially at a time when Americans owe more than $1 trillion in credit card debt, and they are expected to take on even more in 2018.
However, those who use debit cards or cash can also miss out on a few benefits, including cashback rewards and, critically, the ability to improve their credit score and, thereby, pay less interest on loans they take out in the future.