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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris.

When it comes to buying presents this holiday season, more people than ever will be paying with debit cards. That's according to a survey from the National Retail Federation.

And as NPR's Tamara Keith reports, these days, you can use plastic just about anywhere.

TAMARA KEITH: The Salvation Army bell ringers, with their red kettles for gathering donations, are a holiday fixture. But there's something different about this setup outside of this Bedford, Texas Super Wal-Mart. The kettle accepts plastic.

Mr. JACOB JACOBUS (Salvation Army): Every kind of Visa or MasterCard and American Express.

KEITH: Jacob Jacobus is the bell ringer on duty. He says the handheld scanner, known as the cashless kettle, is easy to use.

Mr. JACOBUS: They just swipe the machine just like any regular credit card machine. You can just swipe it and if it's credit or debit, you put in your PIN or you sign a paper.

KEITH: The Salvation Army is taking plastic at about 300 locations this year. Most people still just drop a few coins in the kettle. But those who donate with a card tend to give more, and many of them are paying with debit, meaning the money comes straight from their checking accounts.

Visa, the largest payment network, says that spending on debit cards exceeded credit card spending for the first time during the last quarter of 2008. The trend has continued this year.

Mr. TIEN-TSIN HUANG (Analyst, JPMorgan): We've been anticipating this for years, but it certainly comes a little bit faster than we expected.

KEITH: Tien-tsin Huang is an analyst at JPMorgan in New York who watches the payment services industry. He credits innovations like the cashless kettle for debit's rapid rise.

Mr. HUANG: I think it's really a function of both Visa and MasterCard driving more acceptance at lower dollar value merchants like taxicabs here in New York City. You're seeing it in McDonald's.

KEITH: People are more likely to use debit than credit on small items and that's where most of the growth has been happening. It's gone so far that vending machines and even some churches have card readers.

But while more money is now spent using debit cards, these gains aren't necessarily coming at the expense of credit cards. Debit is mostly just taking the place of cash and checks. Spending on credit has declined during the recession.

Bill Sheedy, president of The Americas for Visa, says that's because consumers tend to use credit cards for big-ticket, discretionary purchases, the very things people have been cutting back on.

Mr. SHEEDY: A higher percentage of their spending is going towards what we would consider to be nondiscretionary. So when they've done that, they've been using their debit cards more often.

KEITH: In the last year-and-a-half, banks have also cut credit limits, closed credit card accounts and raised interest rates. It's not clear just how much of an effect that's had on the overall trend.

But Chris Fichera at Consumer Reports says people aren't as happy with their credit cards as they used to be.

Mr. CHRIS FICHERA (Associate Editor, Consumer Reports): People don't want to charge as much as they did in the past. They want to keep a closer eye on their money. So debit cards do make a bit more sense in that regard, but you have to use them wisely.

KEITH: Fichera says credit cards still have some advantages. They tend to provide better fraud protections and sometimes offer extra value like extended warranties on electronics purchases.

Mr. FICHERA: We generally recommend that people use debit cards for everyday transactions: groceries, gas, things like that. And use credit cards for the big ticket items, you know, TVs, computers.

KEITH: Items where there's a chance you might have a dispute with a merchant, or you might want to make a return.

Mr. FICHERA: With the debit card, the money is gone immediately, so you have less recourse.

KEITH: Visa and MasterCard don't care which payment method shoppers use. As long as you're using plastic, they're making money.

Tamara Keith, NPR News, Washington.

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