Customers prefer debit cards to credit cards

Now day’s customers prefer debit cards to credit cards, mainly because of shift in strategy from their banks.

One of the bank customers Kumud Hirawal reached out for her debit card rather than her credit card.

Some of the banks like ICICI have nearly stopped issuing of new credit cards and even canceling the existing cards of the defaulters. Moreover the banks are publicizing attractive offers to get back their customers such as Kumud to shift to their debit cards.

It is believed the increase in preference of debit card in the industry is due to banks increasing push for debit card usage combined with the customer’s cautiousness with regard to high credit card charges.

According to data for the first two months of the fiscal year there has been 15% of decrease in the payments made by credit card whereas there is increase of more than 40% in the usage of debit cards for the same period.

Moreover there has been 12% decline in the issuances of fresh credit card and there has been overall increase from 80% to 86% in the share of debit cards.

Currently bankers have started making stringent checks on the credit histories of the credit card customers which has raised fear amongst them that customers might default on their credit card payments.

A customer pointed out, “Banks are using CIBIL products and services extensively in their risk management process, at every stage of the customer lifecycle".

The sentiments expressed by some of the country’s bankers have given indication of purposeful shift in their strategy.

Aditya Puri, MD of HDFC Bank, pointed out, "I am issuing cards to customers who will pay my money back."

However Romesh Sobti, MD and CEO of IndusInd Bank, stated, "We are looking to revive our emphasis on debit cards for our customers."

It clearly indicates that banks are trying ways to improve their credit card portfolios which have been badly hit due to increase in default rate and the customers are also preferring a debit card in hand rather than having two credit cards.