Consumers turning away from credit and debit

In the past year and a half consumers have made considerable strides in reducing the amount of credit card debt they carry even as the amount of payments they make on those cards has increased. However, new data suggests that borrowers are also moving on to new payment platforms for various transactions.

New data from Javelin Strategy and Research suggests that one way in which consumers are choosing to complete purchases and other transactions is by using prepaid cards instead of credit and debit, according to a report from Bloomberg News. In all, the number of consumers with a credit card fell to 67 percent last year, from 2010's total of 74 percent, and debit cardholders dipped to 66 percent from 78 percent. Meanwhile, the number of consumers who had at least one checking account dropped to 88 percent from 92 percent.

Instead, use of prepaid accounts rose 18 percent last year, as the number of people carrying them increased to 13 percent from 11 percent, the report said. Many experts say this is a consequence of prepaid accounts shedding the perception that they're primarily for consumers who tended to have lower incomes, especially as fees for credit and debit card use have been on the rise in the last year or so.

But at the same time, consumers who retained their debit and credit cards also began to use them more often, the report said. First Data Corp. found that credit card use rose 5.7 percent in March, and spending on debit transactions grew 14.6 percent for PIN purchases, and 8.4 percent for signatures.

The report also noted that many financial institutions are now offering subprime consumers prepaid cards if they fail to qualify for a checking account, as about 24 percent of prepaid card owners were given their account by a bank, the report said. In many cases, the fees for these accounts are comparable to those for checking.

Consumers also using alternative methods to pay bills

While the way in which consumers complete everyday transactions may be shifting, so too is the way they pay their bills at the end of every month. These new trends may be of considerable concern for banks and credit card issuers, according to a report from American Banker. As more companies offer bill payment services online, consumers may choose to settle their monthly bills through them instead of their regular banks because it might grant them greater flexibility in doing so.

"The threat of disintermediation is wide and varied in financial services," Mark Schwanhausser, senior analyst, multi-channel financial services at Javelin, told the financial news site. "Financial institutions have benefited greatly from bill pay; it's an integral reason why more consumers didn't switch during Bank Transfer Day last year."

Consumers who wish to keep their finances as healthy as possible as spending habits change should take the time to check their credit reports for any unfair markings that may be reducing their rating.