Debit Cards May Not Reduce Debt, Report Suggests

Many recent consumer polls indicate that consumers are opting out of credit card use, and are increasingly choosing debit, cash and check options for purchases.

Frequently, consumers say this measure is to help them avoid additional debts; however, a new report suggests debit card use may not be the perfect cost-cutting tool Americans believe it to be.

Despite recent legislation to curb overdraft fees, the lending industry is on track to rake in more than $35 billion in extra charges from consumers this year, The Washington Post reports. This figure could rise to more than $38 billion next year, which would set a new high for the industry.

"My experience with helping people with their budgets and debt has taught me that debit card users don't necessarily stay within their budget," Post columnist Michelle Singletary says. "They may not accumulate the kind of debt you find on a credit card, but they can still overspend."

Despite this, more Americans are enrolling in costly overdraft protection and continuing to use debit cards. In addition, an estimated 43 percent of holiday shoppers say it will be their primary form of payment this winter, according to recent consumer polls.