Banks are tapping into a credit-shy mood among consumers which is seeing them flock towards a new breed of debit cards.

Kiwibank is about to become the second New Zealand bank to offer the Visa Debit Card, a piece of plastic that operates in every way like a credit card but for the bill at the end of the month.

Westpac has been offering the Visa Debit Card for the past three years and has seen an explosion in demand. The bank says while numbers of new credit cards issued is static debit cards are growing by 50 per cent a year. It now issues three debit cards to every one credit card.

Debit cards take funds straight out of the user's bank account just as an Eftpos card does, but where they differ is they can also be used for shopping online and overseas just like a credit card.

Debit cards are extremely popular in Europe and the United States but have been slower to take off in this country because Kiwis are such large users of Eftpos anyway.

Now gloomier economic times appear to be adding momentum to a trend towards debit.

Electronic payments company Paymark says purchases made with debit cards overall increased by 8 per cent in January. In comparison credit card transactions rose just 0.7 per cent.

Reserve Bank figures show personal credit card balances are still growing but that growth has slowed dramatically, from an annual 8 per cent in December 2007 to 4.1 per cent in December 2008.

CEO Simon Tong said a growing bias towards paying as you go began to show up in the numbers late last year.

"You can see why the likes of Visa and co want to get their product into that market, because it's a huge market relative to credit cards."

Visa's New Zealand country manager, Sean Preston, said 53 per cent of Visa cards internationally were now debit cards.

He said a number of New Zealand banks would begin offering the Visa Debit Card in the next few months.

"It's very popular for people who are averse to credit or perhaps they can't get credit, and particularly it's very popular with younger people who may not qualify for a credit card."

Brian Hayr, head of product management for Westpac, said the debit card was a product for its time. "It's the next generation Eftpos."

He said up to 45 per cent of the banks' customer base did not have a credit card, and with the huge growth in shopping online - particularly on sites such as Air New Zealand, Trade Me and iTunes - the debit card was the perfect answer.

It wasn't just young people that wanted the card. "It was initially a student bias and we're promoting it quite heavily with our student offer at the moment, but it would be fair to say it's very broad-based."

A MasterCard spokesperson said the company did offer a debit card product overseas, but it was not currently available in New Zealand.

Kiwibank will launch the Visa Debit Card in the next two weeks. A spokesman said there would be an annual $10 fee on the card, but that would be waived in the first year.