Lower Income Consumers Use Debit Cards Markedly More, MasterCard Says
More evidence has come to light that suggests credit unions with more lower income members may take a deeper hit from the upcoming cap on debit card interchange than CUs with fewer lower income members.
MasterCard Worldwide has published the results of a third party study that show lower income cardholders and those with lower credit scores use their debit cards significantly more often than higher income cardholders or those with higher credit scores.
"Consumers with subprime credit scores (below 650) use debit an average of 28 times per month for a total spend of $860. These numbers fall to 11 uses and total spend of $324 per month for consumers with superprime credit scores (above 720)," the card brand said, citing a 2009 report from Lightspeed research.
The share of total card spend is correlated similarly; debit makes up 73% of total card spend for subprime users, but only 28% for superprime, the brand added. "This is not surprising, given the greater difficulty consumers with lower credit ratings have gaining access to credit," MasterCard added.
This comes on the heels of another research paper that suggests that consumers that use cash and debit cards subsidize other consumers' credit card use.