Debit card use on the rise for students

johanna.boyle and johanna.boyle

NMU senior Jessica Compton, a speech pathology major, remembers trips to the grocery store with her mother, Virginia. After walking systematically through the aisles of produce and packaged goods, they would push their laden cart to the checkout lane. Then, out came the checkbook. Peering over the counter, she watched her mother’s pen dance across the paper. With a final flourish, her fingers slipped between the check and the carbon copy, finally tearing out the paper.

“I remember she could write super fast,” Compton said.

For children in the future, however, the ritual of watching a parent write a check at a store will be replaced with a plastic card swipe, as more consumers switch to debit card use.

First beginning to decline in the mid-1990s, the number of checks written in the United States dropped from 41.9 billion in 2000 to 36.6 billion in 2003, according to a Federal Reserve Board report. At the same time, debit card payments, which also come directly out of a checking account, increased from 8.3 billion to 15.6 billion. Although debit card payments have increased at a high rate for decades, electronic payments have only recently begun affecting traditional check payments, according to the Federal Reserve.

Today’s student population is one of the first generations to be brought up entirely on electronic payments, bankers said.

“I don’t think most students are familiar with how to write out checks now,” said TCF Bank NMU branch manager Brad Christian. TCF operates out of the University Center with only 10 percent of its accounts not belonging to students or faculty.

All accounts at TCF come with both checks and a debit card, however, most account holders choose to use the debit card, Christian said.

“Convenience is the biggest thing,” he said.

The convenience of debit cards is not only for students who no longer have to fumble for cash or a check book, but also for banks and businesses who can switch over to electronic payments, which speed transaction time and product delivery, said Tawni Ferrarini, an NMU economics professor. Faster business could spur production and savings, she said. Faster debit card payments, however, mean easier careless spending, she added.

“It’s harder to keep track of spending. You should always keep track of receipts and keep a log,” she said.

Students are using debit cards more than ever. According to the Federal Reserve, students typically use debit cards for everyday purchases, such as gas or groceries, but reserve larger amounts, like rent, for checks.

“It’s efficient,” Compton said. “A big perk is the online banking. You don’t have to wait for the check to go through.”

While Compton said that she only used checks for payments which would not accept her debit card, such as paying for rent, junior business major Ross Brooks took a different approach.

“I use my debit card especially for stuff online because you can track it better,” he said.

Brooks, however, uses mainly his credit card for his everyday purchases.

According to the Federal Reserve, credit card use increased from 15.6 billion payments in 2000 to 19 billion in 2003.

However, the growth in credit card use is leveling off, indicating debit card payments are also replacing some credit card payments.

The switch to electronic transfers also helps banks and businesses. The Federal Reserve said that paper payments require physical handling, so electronic payments help to reduce costs.

Students like Compton and Brooks, however, concentrate on the ease that comes with swiping pieces of plastic instead of balancing a checkbook against a counter edge.