ORLANDO – Credit and debit sales volumes have been crisscrossing over the past 17 months, but without an obvious explanation.

In January last year, credit card sales surpassed that of combined PIN and signature debit —and in February of this year, debit retook the lead and continues to grow in share of overall card payments, data from First Data Advisors show.

The reasons for the changing patterns in consumer spending are not altogether clear, Rikard Bandebo, the organization's vice president and an economist, told an audience here last week during the 24th annual Card Forum and Expo.

First Data observed the trend using its vast amount of consumer-spend data, which includes about 50% of overall card spending in the U.S., Bandebo said. Analysts from First Data are evaluating the data and in the near future plan to release theories on the specific reasons for the shifts in card-spending trends, he said.

Some of the common-sense theories don't seem plausible, Bandebo said.

Issuers cutting back on the incentives they offer debit cardholders because of reduced interchange revenue resulting from the Oct. 1 Fed rate cuts mandated by the Durbin amendment might explain why credit card sales rose last year, but it doesn't explain why debit card spending is on the rise again, Bandebo said.

So there's something more than Durbin affecting credit-versus-debit card spending, he said.

Spending overall is up, and traditionally that has been attributable to rising credit card sales and, subsequently, revolving debt. But instead, consumers are tapping into the increased savings they stowed away during the recession to pay off their credit card bills, Bandebo said.

"These savings provide a cushion to absorb fluctuations in gas prices and other indiscretionary changes," he said.

However, that won't be sustainable, and eventually revolving credit will increase, but at a moderate rate, Bandebo said.

"As consumer spending continues to outpace real earnings, we expect the savings rates to fall in the near term," he said.

First Data is a unit of the Kohlberg Kravis Roberts private-equity firm.

For related stories, please visit PaymentsSource.com

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