Insights » How consumers prefer to pay: debit, credit, or ACH

Payment Preferences: Debit, Credit, or Directly from Your Bank Account

While many people have their stalwart piece of plastic in their wallet, it might surprise you that across the country, when paying bills most people (89%) prefer to have the payment come from funds they already have in their bank account, and 79% of that 89% prefer to use their debit card instead of doing a direct bank transfer. After debit cards, people prefer to make direct payments from their bank account (19%) followed by a credit card (11%). This is according to newly released data from doxoINSIGHTS, our collection of analytics reports, and is based on more than three million users paying over 50,000 billers across the United States.

To our surprise, we also found that some regions of the U.S. show a preference when paying from their bank:

• Dedicated to Debit: Southern states like Georgia, North Carolina, South Carolina, and Texas show the highest percentages of those who pay bills via debit card.
• Bound by the Bank: Some of the “I” states have it. Bill payers in Iowa and Illinois are much more likely to pay directly from their bank account than to use a debit card.

Paying bills directly from your bank account has its obvious benefits: it ensures your purchases, withdrawals, and bill payments are deducted directly from your checking or savings account. This can be accomplished by either connecting bill payments directly to your bank account, or indirectly through your debit card. Either option allows you the freedom and control of managing money you know is in the bank.

Committed to Credit: What was even more interesting from the data was the substantial regional differences in the use of credit to pay bills. Residents of far-flung states like Alaska and Hawaii are much more likely to pay bills with their credit card vs through their bank. Almost ¼ of all bills paid in Alaska are with credit.

As for why consumers prefer to use one method over the other, it really comes down to personal preference. The tendency to rely on credit cards to pay bills, however, can typically be attributed to three main reasons: 

1. Credit Convenience: Some people carry their favorite piece of plastic and use it for all purchases and bills – from gas to groceries, health insurance to home bills. As long as they pay it off every month, this practice is fine.
2. Points Junkies: Some people like to “play the game” when it comes to credit card points and reap the benefits! Between air miles, hotel points, and cash back features, they can really add up. 
3. Cash Flow: Some people use credit card payments as a means to an end to avoid late fees on a bill, and then pay off the credit card balance once payday rolls around. 

The main point we takeaway from this data is: people like options! With doxo, users have complete control over how they pay their bills with any payment instrument (credit, debit card, or bank account). Other payment systems like bank bill pay are more limited in their offerings, and some billers only offer one or two payment methods. doxo offers the most robust payment options and flexibility over how people pay their bills.