Debit card use is closely tied to consumers’ credit scores

A new study has found that the number of times a consumer uses their debit card to make a purchase every month, and how much they spend on them, is closely related to their credit score.

According to a study from MasterCard, which also cited third-party findings from Lightspeed Research, the lower a consumer’s credit score, the more likely they are to use their debit card more frequently every month in lieu of taking on credit card debt.

The study said that consumers whose credit score is considered "subprime" – or below 650 – are far more likely to use their debit card to make purchases. These borrowers use their debit card to make an average of 28 purchases per month, and spend $860. This use makes up 73 percent of all their spending on cards.

Consumers whose credit card companies consider them simply "prime" – those with scores between 650 and 720 – use their debit cards less often, the study found. They make just 20 purchases per month on average, and spend $618.

The study also found that consumers with the best credit scores – those above 720, which are considered "superprime" – use their debit cards with even less frequency. These borrowers make an average of 11 purchases a month on debit, and spend just $324 on them. Standing in stark contrast to their subprime counterparts, these borrowers use credit to make 72 percent of all their card purchases.

Despite the wide-ranging disparity in debit card usage per month, however, the study found that the total number of debit transactions has increased considerably, and across the board, over time. Between the fourth quarter of 2008 and the same period a year later, the amount of debit purchases subprime borrowers made per month has increased 10 percent. That number rose 17 percent for prime consumers, and 12 percent for superprime. However, MasterCard found that these increases did not affect credit card usage for the most part, but rather that the rise in debit card spending cut into cash and check payments instead.

In recent years, as the economy worsened and credit card delinquencies rose, lenders made it more difficult for consumers with lower scores to obtain a line of credit, in some cases shutting them out completely. This trend may be one reason for their low usage among subprime borrowers.