The Decision between Debit and Credit: Finance Charges, Float, and Fear
Document Type
Article
Publication Date
1-1-2005
Publication Title
Financial Services Review
ISSN
1057-0810
Abstract
We develop a simple model of a consumer's choice between using credit and debit and show that consumers are always better off using credit than debit when both types of cards are available for a purchase. This result is tested and the persistence of debit cards in the marketplace is examined using data from the 1998 Survey of Consumer Finances. Empirical evidence is presented suggesting that the persistence of debit cards in the marketplace is because of (1) the fact that even households that use credit cards without borrowing do not view credit as a substitute for debit and (2) consumers' fear of credit. © 2005 Academy of Financial Services. All rights reserved.
Recommended Citation
King, John T., Amanda S. King.
2005.
"The Decision between Debit and Credit: Finance Charges, Float, and Fear."
Financial Services Review, 14 (1): 21-36.
https://digitalcommons.georgiasouthern.edu/economics-facpubs/20
