Debit Card Usage: An Examination of Its Impact on Household Debt

Lee, Jinkook, Abdul-Rahman, Fahzy, Kim, Hyungsoo, Financial Services Review

Abstract

This paper investigates debit card usage and its impact on household debts, using the 2004 Survey of Consumer Finances. By conducting simultaneous equation modeling, we examine how debit card users are different from non-users, and whether debit card usage influences household debt. We find that, after controlling for selection bias, the use of debit cards is negatively associated with household debt. We also find that those with revolving debt tendencies (i.e., carrying outstanding balances on credit cards) are more likely to use debit cards than those without a revolving debt tendency. We conclude that debit card usage discourages the accumulation of household debt …

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Publication information: Article title: Debit Card Usage: An Examination of Its Impact on Household Debt. Contributors: Lee, Jinkook - Author, Abdul-Rahman, Fahzy - Author, Kim, Hyungsoo - Author. Journal title: Financial Services Review. Volume: 16. Issue: 1 Publication date: Spring 2007. Page number: 73+. © Academy of Financial Services Winter 2008. Provided by ProQuest LLC. All Rights Reserved.

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