The experts do not recommend using a debit card in lieu of a credit card

[Robson]

The supposed experts say that the debit cards are much riskier than credit cards, so therefore why use them? Here are some good reasons not to use them.

1/ Why let them use your money with a debit card when you can use their money with a credit card?
2/ The banks charge fees for overdrafts when the card is used for a purchase that costs more than your balance,
3/ The money is gone immediately as opposed to a 25-30 day grace period on a credit card.
4/ Returns are more difficult with debit cards.
5/ Credit cards often offer rebates for every purchase 1%-5%.
6/ Yes it takes discipline to only spend what you can pay off each month, but that's the sign of a responsible adult.
7/ If someone gains access to your pin and account info they now have YOUR money out of your account. With a credit card it is still someone else's money.

Yet more and more Americans use debit cards. I've often been tempted when asked .... debit or credit?, "now why would I want to use a debit card?"

I'd appreciate hearing some opinions pro-con.

http://www.usatoday.com/money/perfi/credit/2007-01-24-debit-card-fees_x.htm

[Lars39]

1. A responsible adult doesn't play shell games and knows their

bank balance down to the penny. Checking your account on-line at least once a day assures this.

[JDPriestly]

47. Shell game?

What do you call the bank's delay in depositing the funds into your account after cashing your check? Banking is about shell game. It is not a shell game if you have the money. Using a credit card to cover the costs of purchase is not a shell game just because you have the money in the bank to cover the costs of the purchased item. A shell game is defined as transferring money from one account to another when you don't have the money to cover the amounts transferred. We charge everything possible on one single credit card each month so that in a single transfer we can pay off the whole month's expenses. Why waste your time balancing your checkbook every day? It isn't necessary. Banking is about getting the most out of your money. You should not give your money away to the bank. They get enough of it. I think the tips in the main post are excellent.

[Glenda]

2. People spend less the closer they are to actual cash

Cash < checks < debit < cc

[nickinSTL]

3. here's my take...

For me, only #7 would really be a detriment, IMO.

I'm not clear on what #1 is saying...as for #2, I've NEVER had an overdraft. Ever. So, it's not an issue. Yes, it takes discipline to (#6) only spend what you can pay off each month, but it also takes discipline to not use your debit card for more than is in your account. I have no problem with that degree of discipline.

#3 - the money is gone immediately. Yeah, so? I don't see a problem with that. But then, I've always paid my bills right away rather than hold onto them until they're due. I don't see how that's in any way a responsible way to manage your money. The money's going, now or later, what's the point of waiting? Unless you're in a situation where money's so tight you need the next paycheck to make the payment?

#4 returns are more difficult. I almost never return anything. If I buy it in person, can try it on (if that's necessary), I've never returned anything. If it's bought online or as a gift, most likely it will be on my credit card. I don't use my debit card online.

#5 - not an issue for me, as my credit cards don't offer rebates.

[petronius]

9. If you leave the money in your account longer, you'll earn more interest

although it's probably a trivial amount. And, if some sudden emergency crops up, you'll have easy access to a larger pool of cash without having to get a cash advance from the CC...

[nickinSTL]

26. IF you have an account that pays interest

I don't.

[Adsos Letter]

4. we use credit rather than debit....

...for many of the reasons you cited; our governor is that we never run up more debt than we can pay by the due date.

[thunder rising]

5. Of course the CC Corps are sooo forgiving

if you over draw that account. This is hack framing.

[canetoad]

6. A free life tip

When a corporation encourages you to do something, it is rarely in your favour. Think credit cards, call waiting, cell phone plans.....

[Robson]

It feels so good ripping them off every month

I've been told that the Credit Card Corps call those customers that pay off their bill every month "dead beats". The CC corps get paid the transaction fees from merchants, but they like the loan shark interest even better from customers.

For most of us the 1%-5% rebate check isn't a life changing amount, but it's far better coming in as free money from these leeches, than it is going out to them as interest.


http://www.cardratings.com/bestcards10.html?trkroi_campaign=7D297A69-EBFD-59E7-FF8E-E475D85427A2

[binkster]

67. Haven't paid interest in 20+ years

I am proud to say I pay my credit card off at least once a month and haven't been assessed interest in over 20 years. Even so, I still get many offers in the mail each day for credit cards. The dummies don't realize they wouldn't get much from me.

[Robson]

70. Binks you are what they call a deadbeat - LOL

Quote from this link:

http://www.crosswalk.com/finances/11531779/

"How to Win the Credit Card Game" (Cheapskate Monthly)

snip

"Your opponent’s goal is to develop you into a revolver—a little company lingo for one who carries a balance from month to month. Credit-card companies reluctantly tolerate those of us they call deadbeats—cardholders who always pay their balances in full and do not pay interest and fees."

[binkster]

77. and proud of it

I actually did mess up one month and had a 26 cent charge. I was so pissed. My goal is to give the banks as little as possible. I no longer have a mortgage and paid cash for our cars. Just in case you get the wrong idea, I'm not rich, just frugal.

[Robson]

94. THANKS to all for the opinions!!!!!!!!

To close the thread.....THANKS! I've learned that there is more than one way to pay for an item. Some use credit, some use cash, and some use debit.

If you can, think about using the former. It's always to your advantage if you don't abuse it.

Again....THANK YOU!!!!

[ComerPerro]

7. only time Credit card is better than debit/check card is when

you need to put a deposit down or a hold. With a credit card, they can just put the charge on and then take it off when you are done. But with a debit card, that hold on your account affects your real money. This occurs with things such as car and truck rentals and hotel rooms, for example.

But that's about the only time I can imagine any benifit whatsoever to a credit card, unless you need to spend money you don't yet have.

[Robson]

18. Credit card could be $170 year or more saved.

A big factor to me is the risk of a debit card, and the fact that they often have your money before you have the item or service.

But aside from that, let's say you spend a $1000 a month on your credit card for everything from gas to groceries to incidentals. That's a $1000 dollars average balance that could be in a money market account at 5% interest or $50 per year. Instead with a debit card you are likely earning little to nothing in a checking account. If you add a 1% rebate on the $1000/month thats another $120/year saved. That's $170 and enough free money to make it worthwhile in my book.

BTW some credit cards even give a 5% rebate on gas and groceries.

http://www.cardratings.com/bestcards10.html?trkroi_campaign=7D297A69-EBFD-59E7-FF8E-E475D85427A2

[Liberal_in_LA]

51. Yep. You can do most anything you need to do with debit card

agreed

[insane_cratic_gal]

8. I use debit because I'm less likely to spend

money I don't have. Whats in my account is in my account! And never once had a problem returning an items with the use of a debit card.

I don't go into credit debt, sounds like propaganda written by a credit card company really.

[Mythsaje]

10. I prefer to spend money I actually HAVE

and not money that I may have later.

[Left Is Write]

29. I think the idea Robson is trying to convey is not that you should use credit

to spend money you don't have, but rather you leave the money you have in an interest-bearing account and pay everything at the end of the month. The principle is the same as using your debit/checking card - you only spend as much as you have.

It's what my in-laws do. They do not use checks or checking/debit cards, and only rarely carry cash. They pay for everything with their credit card, but they don't spend money they don't have. They pay the credit card bill in full monthly.

[Mythsaje]

32. I prefer cash.

I don't like credit cards. Period.

[Left Is Write]

33. I understand.

It just seems that some people were under the impression that OP was recommending floating a balance.

[Alcibiades]

35. Because most people do

and the banks are banking on that. Perhaps for the most responsible consumers, credit cards are better. For the rest of us, they are a one-way ticket to balances at 24% APR that are never paid off.

[Mythsaje]

37. It's too easy to have unexpected bills that

interfere with your ability to pay the balance at the end of the month. That's one of the things I don't like about this notion. It's great if you can always be certain of your income and your monthly expenses EVERY time, but one misstep is deadly.

[JI7]

46. you can be responsible but for high cost items where you have to pay monthly

it can really hurt many people.

that's why it's always better to make a montly payment plan with the store or company you bought the item from itself. usually you can make interest free monthly payments to the store or company. you can do this with cash, check credit card etc.

[muriel_volestrangler]

60. But if you rely purely on cash, you won't be able to pay at all in that situation

A credit card will allow you to borrow for the unexpected - but at a high price. If something unexpected happens, it would be better to arrange a loan from a bank at a lower interest rate as soon as possible - but a credit card does allow immediate payment, which could be useful in an emergency.

[Oilwellian]

11. I use a debit card in lieu of writing a check

there's no comparison between a debit & credit card...they're two different beasts. Debit is a way to spend the money you have...credit is a way of spending money you don't have, and then some.

[pitohui]

12. experts must never travel internationally

as far as i know the primary purpose of the debit card is to receive funds in local currency when traveling internationally, without being subject to the ginormous credit card "cash advance" fees

if you never travel and many people don't, then i don't guess you need one

[trof]

57. I have traveled the world with a credit card.

I'm a retired airline pilot.
Before the euro, I've gotten cash advances in local currency at streetside ATMs. No interest if paid off at the end of the month.

Almost every retail place I went accepted Visa. For some reason Visa was more universally accepted in Europe than Mastercard and Discover back then.

The bill was in local currency and Visa did the conversion at an acceptable exchange rate. Usually at a better rate than the local currency exchange.

I've never had a debit card, for all the reasons listed above, and I never will.

[muriel_volestrangler]

61. That's surprising - cash advances in any currency attract interest from the day of withdrawal

on all British credit cards - just like a cash advance in your own currency. Debit cards, on the other hand, treat it like an ATM transaction with a bank card in your own currency - ie no interest due.

Travelling is precisely when a debit card is better than a credit card, for this reason.

These days, Visa and Mastercard should be accepted just about everywhere, equally. Forget trying to use Discover in Europe.

[pitohui]

73. trof's information is dated, in post he states it is pre-euro

i don't think people always realize how much travel has changed in some ways in just the few years of ther 21st century

[pitohui]

72. yes but as you say BEFORE THE EURO, times have changed

these days credit card fees are escalating and are often not at all acceptable on top of the already horrid exchange rate

also traveler's checks are passe in europe, so even tho i can get them w.out a fee in the usa, i can't use them w.out paying a horrid fee in europe

for getting cash in europe there is just no substitute for the debit card in the 21st century

[Jack Bone]

13. I debit... I was one of those guys in the 90's that had...

3 platinum cards...2 of them maxed...ran into a run of bad luck (family illness) got deep into debt..and bad credit...refinanced the house at an exuberant rate...like 9.52% to pay them off

2yrs ago, my wife & I refinanced the house again and got a better rate @ 5.6...we're in the rebuilding credit game..and from what I hear, it's quite popular.

so yeah we've got a credit card w/ a $500 limit...& it's hard to get airfare w/ that..so we use our debit card..

so basically, debit is our only option...we got bit by the snake...and now we're watching where we walk...every single step.

[Buzz Clik]

14. Credit card companies will screw you whenever possible.

Enormous interest rates at the drop of a hat.

Never again. Debit card only.

[Left Is Write]

30. Interest rates only matter if you carry a balance. The OP isn't advocating that.

[Solon]

15. Well...

1) Because it is YOUR money, and you don't owe anyone money when making a purchase, or at the end of the month.
2) Actually, this depends on the individual banks, when I was younger, and less careful with my money, I wasn't able to do an overdraft on my card, it was rejected, like a bad credit card, if I didn't have the money in the bank. I never got a negative balance because of this.
3) I don't see how this is a big deal, the money is gone when you use cash too.
4) I don't think this one is true, I've returned plenty of items in various different places that I purchased with a debit card, I even forgot the receipt in one case, I was still credited back the money by usually the next business day.
5) So? I wouldn't sign a contract with my own mother if it allowed her to change the terms without telling me about it, why should I trust Credit Card Companies?
6) This would have applied to me in the past, but not now, and besides, I don't want to get fucked over by the Credit Card companies, so no deal.
7) This doesn't apply either, if my Debit Card, PIN, or number is stolen, and I notify the authorities in a timely manner, I'm responsible for 50 bucks of the purchases, or none, depending on the timeliness of when I inform authorities.

[Warpy]

16. Well, let's have a go at this one

1. Credit cards are a scam. It's still your money, even if you get to delay writing the check for a couple of weeks. Responsible people don't spend what they don't have, so that two weeks of delaying the actual hit to your account shouldn't matter. Also, if the mail gets delivered late that week, you're going to be in for a $39-50 late fee on that credit card, not so with a debit card.

2. Responsible people know what their balance is. They check it online before they use that card.

3. See number 1.

4. Returns are exactly the same with a debit card. I've done it more than once. I have never noticed a difference. Some retailers are pleasant and some require that I shriek. It's the retailer, not the card.

5. Those rebates aren't much of an inducement, IMO, and only are there to get you into a very bad habit of charging a pack of gum on that card. Remember, junk fees are how they make their money on responsible users, so if the mail's late, there goes your rebate.

6. Well said, but that applies to both cards. Remember, every person in serious credit card debt started out by paying that balance off every single month. With a debit card, when the well goes dry, that's it. People get trapped by that easy and seemingly bottomless credit bin, which is why so many people are in trouble today.

7. Identity theft is a big deal whether or not they steal a CCN or a PIN. Both can cost in the time and trouble it takes to track down the thief and make sure s/he hasn't stolen more than the number, to make sure that s/he isn't using your good name to get more credit cards and worse. Smart people who have the wherewithal use limited bank accounts for those ATM cards to limit the damage should the account get phished or stolen. Making it not worth their while is a huge deterrent.

A more reasonable solution is the prepaid credit card for people who travel and need to use one frequently.

[napi21]

17. I agree with all of those points! I have 2 debit cards but the ONLY

time I ever use either one is to get cash. I put EVERYTHING on a credit card and pay it off at the end of every month. I also get a rebate on every purchase which I wouldn't get with the debit card.

I don't like the idea of giving anyone direct access to my cash! If there's a problem with a charge on a CC, I've never had any problem getting it resolved instantly!

PLUS, at the end of the year, I get a nice summary of all my expenses for the entire year for preparing my taxes!

Can't beat it!

[mahina]

19. I use my debit card for everything.

I've used it three times today. I log every transaction in my checkbook and balance it weekly, I always know what's in there, and I don't pay an additional 8% on every purchase. I have an automatic 1000. overdraft available though I've never used it.

Yes, that's 8%. I killed my citibank card when they raised the rate to 26.5% when I was late for one payment. Now I use my credit union for everything, and I love it.

Capital one didn't replace my card when it expired two years ago and keeps sending me dings for the annual fee even though I faxed them a cancellation two years ago.. Finally I told them I was going to report them to the state consumer protection office and guess what? They got really nice after that, cancelled the card (FINALLY) and removed the fees.

Credit cards suck and citibank and capital one sucks ass.

[Liberal_in_LA]

50. Me too! Debit card all the way. also agree about your low opinion of Citibank and capital one

credit cards enslave you.

[SoCalDem]

20. Methinks the "experts" are somehow on the take from the credit card companies

Credit card companiesd know that MOST people "run a tab", and the more used to using the credit card, the better the chance they will "catch" the customer in a late fee here, an overlimit there, and then the attendant rate-creep (always upward)..

If one uses their debit card, and utilizes the online banking feature, one ALWAYS knows..to the penny.. how much they have and how much they can spend.. (not an idea credit card companies embrace)

[Robson]

22. Very interesting comments

I've heard that debit cards were growing in popularity. The consensus opinion from most seems to be (to paraphrase)...."I'd rather know how much I have and spend only my money than spend borrowed money interest free for 30 days and also get a rebate". Of little concern is that once the bank has your debit card money allocated, spoken for, or spent, it is very difficult to get it back. It's caput from your account.

Thanks for all the input, but I'm going to keep on ripping off the CC cos for their rebates and their free 30 day loans. :-)

[DaveJ]

21. About the "discipline" point....

It's not about discipline to the millions of people living paycheck to paycheck. People who can live on low wages have the utmost financial discipline to manage that. If something unpredictable occurs that interrupts their income the credit card companies will joyously have their way with them. IMO, unsecured debt is a recipe for disaster, a bad idea in any non life threatening situation.

[Robson]

25. That is part of it but not all.

I have a brother-in-law that singlehandedly supports a family working at a very low paid job. He is disciplined in what he spends and never carries a balance on his credit card, drives a ten year old car and never complains. I know others that are always complaining that they are deep in debt, spending more than what they make on all kinds of frivalities, buying a new car every year, two packs a day of smokes, big credit card balances, etc. There are double earner physician families that can't control their spending and credit cards. For some the debit cards work well.

So there is a big element of personal responsibility regardless of income, and there is luck too as a health issue can overturn all the best financial plans.

[ShaneGR]

23. I'd recommend debit card...

The use of credit cards, with the current system, should be measured and planned. Not everyday. It makes no sense in my mind to use money "that's not yours" on a daily basis. You might run out of money on a bank account but it's much worse if you can't pay off your credit cards and get stuck with bad credit for years to come. If you're late on a credit card even once, that company will bend you over backwards and the total you'll eventually pay will be FAR greater than the amount charged as a bank statement.

[AZBlue]

24. Actually, when I return something on a debit card I get my money back in 0-3 days.

On a credit card, never less than 5 days, has taken up to 3 weeks. And, most debit cards are covered for fraud just like a credit card is.

I agree with the earlier post that said this sounded like a list from a cc company.

[Madspirit]

27. How are they even comparable?

One is like cash and one is a credit card. ...and you cannot buy over the amount you have with our debit care so no overdraft. It won't take more than we have in our bank account. Our card can be used as either, debit or credit. We always just use the debit because we just carry it instead of cash. We never use the credit card. It is for emergencies ONLY.

Lee

[Robson]

54. Many debit cards now allow users to overdraft

According to this article many debit cards now allow users to overdraft to the banks benefit. Gives them billions in fees. http://www.boston.com/business/personalfinance/articles/2007/07/20/a_pitfall_of_debit_cards_is_overdrawing_your_account____and_facing_fee/

[Buns_of_Fire]

59. True. I have overdraft protection. Twenty big ones if I draw down to a negative balance. But...

My mother, on the other hand, mistakenly went over her credit card limit by $12. In response, her CC company charged her $35 for some bullshit fee AND demanded she get her balance back below her limit.

So...

If I go over my limit (i.e., overdraw), I have to make it up, plus pay $20.

If my mother goes over her limit, she has to make it up, plus play $35.

I think I've got the better deal. (On the other hand, if I can't afford something, I just live without it. She's convinced the Magic Money Fairy is going to drop enough in her lap to cover the next bill that comes due. Whatcha gonna do? :shrug: )

[Madspirit]

65. We have overdraft protection

...but not for the Debit card. It simply won't take out what isn't there. We use it EXACTLY as cash.
Lee

[Left Is Write]

28. I use my check card as a credit card. I never, ever make PIN purchases with it.

I also get cash back for every check card purchase.

I have credit cards, and there are times when it is prudent to use one (I always use a credit card to purchase airline tickets, reserve and pay for hotels, reserve and pay for rental cars, and other purposes), but for every-day type purchases, there are lots of benefits to using my check card.

Edited to add - I have returned things purchased with my check card and had NO problems whatsoever. The credit usually appears in my account in less than two days.

[dysfunctional press]

31. i use my debit card in lieu of a CHECK.

when i need to use a credit card, i use a credit card.

[proud2BlibKansan]

34. I don't have a credit card

That's all the reason I need :)

[JI7]

45. in Los Angeles a few parking structures only accept credit card as payment

or debit card i assume.

i am wondering how common this will become. i didn't even know this until i went to exit and pay . good thing i did have a credit card. but i wonder what would have happened if i didn't.

[proud2BlibKansan]

49. They keep your car?

:)

[wuushew]

36. Debit transactions are better for small businesses

When you purchase goods using a credit card the transaction cost which is much higher to process is eaten by the business owner. I rather be screwing over the DLC/credit card companies than my neighbor.


Also the use of credit cards has massively inflated and over leveraged the money supply which means when this unsustainable economy does crash it will be all the harder.

[LiberalHeart]

38. I never carry cash; I put everything on a credit card.

I've been doing this since the early '70s. I never run a balance; have never paid an interest fee in my life. Once the credit card company added a late fee to my bill. It was bogus because I've never, ever paid late. When I called them, they removed the charge, then put a $5.00 credit on my account for my trouble.

For every $2,500 I charge, I get $25 back. I routinely charge $2,500 or more per month, sometimes double that. I see zero reason to go with a debit card, and 25-50 reasons each month not to.

[demodonkey]

48. Glad you can afford to charge and repay $2500-$5000 per month. Congratulations.

Many of us don't make half or even a fourth of that -- TOTAL -- per month. Some don't even make that much in the better part of a year.

Congratulations on your success. I hope you remember to share some with Democratic (big D) and democratic (small d) causes.

[Triana]

39. I REFUSE to have a debit card...

..because some thief got hold of my debit AND cc numbers and ran up charges on both.

BE AWARE that a with a debit card, if someone steals your number (the DO NOT NEED your pin) - they can use it just like a credit card - running up charges that come DIRECTLY OUT OF YOUR BANK ACCOUNT.

With a credit card, it's not paid for yet - it's still on credit - but with a debit card, the bogus charges come right out of your bank account.

After that happened to me I got RID of the fucking debit card and I refuse to have another one. I have a PLAIN OLD ATM card - and they HAVE to have the pin# to use that and it is NOT a debit or credit card - just a plain ATM card.

Also, I still WRITE CHECKS and use CASH for most purchases. I use my c.card online ONLY with one of those VAN (virtual account numbers).

I will NEVER use a debit card again. The damned bank keeps trying to push one on me and I keep refusing. I DON'T WANT ONE ever again.

[GaYellowDawg]

43. I have the solution to that...

My picture is on my debit card. Kind of hard for someone else to use it.

[kineneb]

40. rechargeable debit card is great for internet shopping

We are now post-Ch. 7 bankruptcy, and will probably never have credit cards again. Given our circumstances, our credit rating is of little interest to us.

I have a bank debit card and a rechargeable "mastercard" debit card. I use the bank card for "official" purchases (food, sundries, etc. at local businesses). The rechargeable card I use for internet shopping and what little traveling I do (mostly gas). The rechargeables are great because you can only spend what you put into them and if someone steals the number, you are only out whatever was on the card.

[goodgd_yall]

41. The good reasons are only good if you can pay the balance off every month. n/t

[leftofthedial]

42. credit, credit, credit, borrow, borrow, borrow

spending only the money you have is unamerican.

[JI7]

44. in terms of dealing with Fraud you are right, but for many people it's too easy to run up credit

card charges because they are paying the monthly minimum for whatever reason.

those who usually pay off the credit card charges in full are better off with credit cards.

my card number was stolen a couple months ago.i still don't know how it got stolen. the charge was somewhere in South America where i had never been. i still had my card with me and always have my wallet and cards with me. so i know they didn't get the number that way.

i do buy things over the internet at times so i think that's the most likely way the number got stolen. but because it was a credit card i wasn't responsible for paying off those charges i didn't do as i might have been with a debit card. i'm not sure how debit cards work and if you can get the money back if you can show it wasn't you who used the card.

i do think credit card companies are scumbags though and easily take advantage of people and put them in horrible situations. i wish stores would offer rewards for those who want to use cash as is the case with credit cards.

[Tesha]

52. Point 7 is one of the most important points.

> 7/ If someone gains access to your pin and account info they now
> have YOUR money out of your account. With a credit card it is
> still someone else's money.

Point 7 is one of the most important points.

Living in the electronic world, you've got to accept
the fact that sooner or later, someone will gain
fraudulent access to your account, either though a
high-tech hack that grabs your card number off of a
website or a low-tech account like a "skimmer" that
lets some waiter at some restaurant record the
critical details from your card as you pay
your bill.

If this happens with your debit card, you're dead
(financially speaking): your bank account gets
cleaned out and *IF YOU'RE LUCKY*, someday you
might recover your money. But in the meantime,
how do you live? And, BTW, how motivated is your
bank to recover *YOUR* money on your behalf?

If someone skims my credit card, the situation
is much different. They're stealing money from
*MY BANK*, not from me. At the end of the month,
I get the bill, and when it shows that I made
thirty three purchases from the Ukraine, I
simply sign an affadavit saying "not mine".
My bank doesn't make me pay, issues me a new
credit card number, and off we both go. Because
it's *THEIR MONEY* on the line, they're highly
motivated to catcth the bad guys and recover
*THEIR MONEY*.

In fact, it almost never gets to the point of
you getting a bill with bogus charges on it.
Instead, you get a call from your credit card
company that asks you whether you, by any chance,
have been shopping in the Ukraine today. And
when you say "Why no! That's why you were able
to call me at home!", they handle everything.

Right now, credit cards are far better protected
than debit cards, and if you are disciplined
enough to not run a balance, you're *FAR BETTER
OFF* to routinely use a credit card rather than
a debit card.

Tesha

[Robson]

53. Use debit cards at your own PERIL.

Thanks, I agree with you that is the single most important reason why I would never use a debit card.

I posted this thread after reading this news article below (but I couldn't find it until this AM). I thought it worthwhile making others aware of the pitfalls of using debit cards vs credit cards. I never could understand why anyone would want to use them, but the responses here gave me some insight on why users use debit cards.

I consider using a credit card versus debit card as being somewhat analogous to keeping the gas tank of your car always filled up versus only adding the amount of gas that you will need for a specific trip. You still spend the same amount per month but its far more comfortable having a full tank. Whether you earn 15K or 500K a year, the most important aspect is having the discipline to budget and not overspend.

http://www.kansascity.com/business/moneywise/story/199434.html

edited: grammar

[sendero]

55. Debit cards...

... are for folks whose credit is too poor to get a credit card.

There is simply NO advantage to using a debit card, none.

[MadHound]

56. And then there's real old school, using cash

I've been plastic free all of my life, and find it to have been a blessing. I do have a checking account to pay bills with, but no credit card. My ATM card doubles as a debit card, but I've never used that funtion and have no desire to do so. I find it to be quick, convienent and I've never encountered a problem I couldn't handle.

I find plastic to be a sucker's game, especially now with the risk of ID theft and what not.

[muriel_volestrangler]

62. Have you ever paid for something on the internet?

If so, how?

[MadHound]

78. For the most part I tend to shop locally

For mail order and internet purchases, check seems to work just fine:shrug:

[muriel_volestrangler]

90. But that will take a few days more

because they'll want to receive the check, at least, before dispatching goods. In that case, a card has a clear advantage.

In Britain, checks are becoming almost never used. Many stores won't take them now, and in the past 2 or 3 years, I think I've only written them to friends, when we've had some kind of joint expenditure (like a vacation) and are settling up who paid for what.

[MadHound]

92. Yeah, it takes a few days longer, oh well

I'm not one of those who is hung up on next day delivery or other such things. Plan ahead a bit, and accept that things take time:shrug: The trade off for not feeding the CC corporate beast, not leaving a trail of purchases where ever I go, not having to worry about ID theft or other people in my bank accounts more than makes up for a few days of waiting.

[Midlodemocrat]

88. Paypal works if you don't have any credit or debit cards.

More and more merchants are taking PayPal it seems.

[seabeyond]

58. i wonder why use debit too. i have not found a "good" reason to debit

but then.... i pay my credit card in full end of month and have only one. but i agree with your post

[Cerridwen]

63. Fall ONE payment behind..

The idea of paying the balance off every month is wonderful. You use your card to pay monthly bills then pay them in bulk at the end of the month. Your interest is low and it's easier to track for bookkeeping purposes.

Have a "catastrophic" emergency and be unable to pay the balance on time, one month, and you may be screwed. The interest is applied as are any late fees. The next month you owe 2 months worth of bills plus. If you can't "catch-up" at that time, the downward spiral begins. If you leave off paying a utility payment (for example) in order to have the money to pay the cc payment, the cc company can use "universal default" to raise the interest rate to the max, on your cc.

It can become quite...interesting...to play catch-up, presuming of course, you have the means to do so.

edit: extra word

[Robson]

68. The chips are all in the banking and credit card company's favor

I agree that the chips are all in the banking and credit card company's favor, thanks to the bought and paid for and predominantly pro-corporate Republicans in Congress and their backing of loan shark policies. The most outrageous of all is that if these companies or their agent loses your data, and create ID problems for you, they face no punitive action. But it's still in your lap as your problem.

I'll never ever give a bank or cc corp the ability that a debit card provides, and that is to draw down my account. I like to control when money comes out of my banking account.

My father in law lived on $1100 per month SS and he still managed to save money (couple hundred a month). He had a credit card and paid it odd every month, and if he needed something extra he took it from his emergency fund which in ten years living on SS grew to 30K. The problem with many Americans is they would rather spend and buy, than put some in a bank for a rainy day. Shopping has become a detrimental form of recreation. We need a change in culture from consumption to saving.

[Cerridwen]

71. I agree. If the "corporate person" was held to the same standard

as a biological person, we'd see a lot of corporations "put to death" for some of the things they do.

One of the myriad ways in which corporations' "rights" trump human rights.

[Raine]

64. Debit cards are easy to get

credit cards are not.

[Swamp Rat]

66. I am finally credit card FREE!!!! ..... WEEEEEEEEEEEEEEEE!!!!!!!

Feels good. :)

[HiFructosePronSyrup]

69. Yeah, right.

If you can't handle a debit card without overdrafting, how are you going to use a credit card responsibly?

[flyarm]

74. WHEN I AM USING MY DEBIT..I DO NOT GET A BIG BILL AT THE END OF THE MONTH..

AND I USE ONLY WHAT I HAVE..I OWE NO ONE A DAMN THING!

NO CHARGING ..NO BILLS ..

life is sweet!!

fly

[Robson]

79. I agree

If it works for you that is good. Contentment versus financial worry is what counts, whether you make 20K or 25M. Over the years I've always spent less than I earned, and got into the habit of always saving or investing a little. And over the years that philosophy has paid off handsomely as I have a nest egg, no mortgage, no debt and I get back a very nice Citi bank credit card rebate yearly. It doesn't happen overnight but when you learn to let your money (regardless of the amount you earn) work for you versus vice versa; and learn it is more satisfying and rewarding in the long run to build up a nest egg than the "must have it now" attitude that is prevalent with young people, that time will come. It takes time.

[RB TexLa]

75. I use my credit card as a check most of the time. I pay rent, electric, phone/DSL everytime with it

and use it for other things most of the time and then make a payment that day to it. The bills are online, literally I pay $200 with a credit card then within 3 seconds make a $200 payment to the credit card. If you have rewards on your credit card why wouldn't you do this?

[Behind the Aegis]

76. One major issue with debit vs. credit

One of the biggest issues with debit vs. credit is if your credit card is stolen and misused, it is usually much easier to get the issuing bank to reverse charges as opposed to the bank of the debit card. In the case of the former, it is their money that has been stolen and they will jump to action to get it back. In the latter case, it is your money that has been stolen and the bank has no real vested interest as the crime was not committed against them.

[Robson]

80. Amen

There's a big difference in the way the financial institutions look at security breaches/losses between a debit and credit card.

Bank security response.

Debit Card holder: "Let's see ... that was last week or was it the week before that you called that someone had withdrawn or purchased items that cleaned out all the money from your bank or brokerage account? We'll have to see if we can get someone on that. In the meantime you can make an app at our loan department for a short term loan"

Credit Card holder: "So they stole your credit card number and have rung up thousands in credit card purchases? As you re aware you aren't responsible for these losses. We'll issue you a new card immediately and FedEx it to you tonight. Thanks for letting us know."

While the debit card holder breaks out in cold sweat and has sleepless nights. The CC holder is unaffected and has no worries.

[Katherine Brengle]

81. I don't pay interest on purchases made with my debit card.

Therefore I prefer it. I have no desire to pay more than necessary for things.

[truebrit71]

82. Some basic problems with your logic...especially number one...

...Since when is credit that is given to you that you have to pay back considered "their" money...??

When you use credit you are spending money that has been lent to you that you have to pay back PLUS interest...It is never "their" money...

If you pay off the credit balance every month to avoid getting charged the interest why not just cut out the middle man (and the hassle of trying to remember to pay things before the grace-period expires) and just use the debit card.

I know of NO-ONE that can afford to pay off their entire credit card balance monthly...

[Robson]

83. Thank you

In all honesty most of the people I know do pay off their credit card every month. I know people that live only on social security that pay theirs off every month. It's how one lives, not how much they earn. They buy on credit only what they'd spend on a debit card for that month. I don't want to sound judgmental but all it takes is a little self control and restraint against impulse buying, and building up a nest egg for when you need a little more to cover an emergency.

In "number one" I meant that you have purchased items using their (the credit card cos.) money until you pay it back. You've used their money while yours stayed in the bank account for up to 25-30 days drawing interest. You borrowed their money interest free for that period which is always a good deal.

A debit card is a good method to break bad habits of impulsive buying and spending too much. But a better long term solution that will build up a good credit rating is to go to a credit card.

Thanks again for the input.

[truebrit71]

84. No problem...

:hi:

[LSK]

85. I use cash for the most part

[JerseygirlCT]

86. I completely agree with you, and do not own a debit card

I don't see the point.

You make all good points, that I agree with, for using a credit card when needed.

We mainly use cash. For some expenses outside of our planned weekly expenses, we use a credit card. We always pay the charges, in full, each month, therefore accruing no interest fees.

We also don't do the constant ATM run that so many people seem dependant on these days. Again, I don't get it. We cash our paychecks, take out the cash we've budgeted, and live on it. Simple enough, for us, and far more predictable!

[Midlodemocrat]

87. I put large purchases on my AmEx for the points as well

as their 'double the manufacturer's warranty' policy. Came in very handy when my new dishwasher broke 354 days after purchasing it. All I had to do was mention American Express to the manufacturer and they immediately complied with getting a new one.

I use my debit card for smaller purchases. I just about never carry cash.

[Robson]

89. Another good point

That's another good point as some credit cards double the manufacturer's warranty in addition to rebates, etc.

[malaise]

91. We own no credit cards

and have used debit cards for over a decade. We simply tranfer X per month to a current account for the debit card. That account covers checks for utilities and groceries as well. We get discounts on things that matter by becoming members - Barnes and Noble, Costco, etc. Works like a dream.

Only last week I ran into the bank manager by accident and she offered me a credit card for the Nth time. My answer is still no thanks.

Re #7 I've never had that problem.

[RebelOne]

93. In my case, I have no choice but to use a debit card.

I recently filed a Chapter 13 bankruptcy and I am not allowed to have a credit card until my bankruptcy is discharged.