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Credit cards? Nah! Americans moving to cash, debit cards.

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Why the switch? One big reason is that hard economic times and tight lending conditions have forced card issuers to pare risky accounts and consumers to trim card balances. The shift is especially evident among young adults, many of whom seem to prefer a pay-as-you-go approach. But such a move could hurt retailers, even as reforms could spawn new card fees.

New fees coming?

For example, depending on the debit-card rules that the Federal Reserve adopts, consumers could have to pay – or pay more – for checking accounts tied to debit cards and "get fewer benefits associated with debit-card use," says Shawn Miles, head of global public policy at MasterCard Worldwide, based in Purchase, N.Y.

Since the recession, consumers have been paring credit-card use. In September, the level of revolving debt (mostly from credit cards) was down nearly 18 percent compared with December 2008, Fed data show. By the end of September, the number of open credit-card accounts was down 24 percent from its 2008 peak, the Federal Reserve Bank of New York said.

"After the economic trough, we do expect debit cards to remain more popular than credit cards," says Brian Riley, senior research director of bank-card services at TowerGroup, a financial-services research and advisory firm based in Needham, Mass. He expects "the recession's mental effect on people" to linger, since "it will take decades for households to regain the net worth they had in 2007."

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