Credit cards vs Debt cards

[Guerrero]

I agree with all the above pro-credit card opinions above.

I'll just add: (if you pay it off every month) you're using someone else's money if something goes wrong. If you get a card from one of the big financial institutions, they have pretty strong fraud detection, which I appreciate. With many credit cards, you can use your app/web interface to generate "virtual" credit card numbers (mainly to use online), that you can turn off at any time and restrict to a certain (or group of) vendors - additional fraud protection.

Plus the reward points aren't bad; the way we use our card, we usually get a couple free airline tickets a year.

[JTQ]

One difference is of course that when a debit card is charged, the money has now left your bank. With a credit card, the money does not leave your bank until you pay the bill.

One reason I don't have a debit card. I'm a Dave Ramsey fan, but his love for the debit card is where we part ways. A credit card, if you pay it off in full every month is basically a free 30 day loan.

Overall I have found using debit cards as much as possible keeps my stress level at a minimum. I am never wondering what the monthly payment will be to get it paid off in full.

I remember a buddy about 25 years ago telling me the same thing. I started thinking about it, and it struck me, if he could track the debit card charges, why couldn't he track the credit card charges?

I'm the complete opposite. Using a debit card would keep me up at night. Do I have enough in the checking account to make that charge? I pay my credit card off every month, but I never sweat it. When the bill comes, if it is bigger than expected bill, or if I know it's going to be big due to air travel or a big purchase, I just move some money from the savings account to the checking account and pay the bill.

When my youngest first graduated from college, she didn't have the work history for a credit card, but the bank offered her a debit card. She was fairly happy with it, but eventually the bank offered her a credit card, and she began to prefer using the credit card (she also pays off her balance every month). She pretty much only uses her debit card now for the ATM, and uses the credit card for just about everything. She's also noticed the security protocols are more robust with the credit card over the debit card which are both issued by the same bank.

My older daughter recommended to her younger sister, if she's going to keep the debit card, don't keep a whole bunch of cash in her checking account - or whatever account is tied to the debit card - since there is a possibility criminal activity with her debit card could empty out her account. This is not a threat with a credit card.

[mtnbkr]

One reason I don't have a debit card. I'm a Dave Ramsey fan, but his love for the debit card is where we part ways. A credit card, if you pay it off in full every month is basically a free 30 day loan.

Yup.

I remember a buddy about 25 years ago telling me the same thing. I started thinking about it, and it struck me, if he could track the debit card charges, why couldn't he track the credit card charges?

I was coming here to say the same thing. I keep a running tally in my check register app of all charges to my credit card and send in a lump sump payment every week or two. Except for special circumstances, I never charge more to the card than I have in my checking account, so I effectively use it like a debit card, but with the benefits of a credit card. I have no balance beyond the 30 day period, I earn points or cash back, and I reap the benefits of a credit card. I've been doing this for 15-odd years without issue.

I'm the complete opposite. Using a debit card would keep me up at night. Do I have enough in the checking account to make that charge? I pay my credit card off every month, but I never sweat it. When the bill comes, if it is bigger than expected bill, or if I know it's going to be big due to air travel or a big purchase, I just move some money from the savings account to the checking account and pay the bill.

I never got bothered by using the debit card because I obsessively track spending, but it is nice knowing that I have the cushion of a purchase riding on the credit card for a period of time if I don't have the cash in checking.

When my youngest first graduated from college, she didn't have the work history for a credit card, but the bank offered her a debit card. She was fairly happy with it, but eventually the bank offered her a credit card, and she began to prefer using the credit card (she also pays off her balance every month). She pretty much only uses her debit card now for the ATM, and uses the credit card for just about everything. She's also noticed the security protocols are more robust with the credit card over the debit card which are both issued by the same bank.

Thing 1 has her own credit card and checking account as well (junior in college). She uses them the same way I do and is building up her credit and earning cash back. She's very responsible with those instruments and hasn't run into any issues.

My older daughter recommended to her younger sister, if she's going to keep the debit card, don't keep a whole bunch of cash in her checking account - or whatever account is tied to the debit card - since there is a possibility criminal activity with her debit card could empty out her account. This is not a threat with a credit card.

I gave the same advice to Thing 1, but mainly as a hedge against "why not, I have the cash", which can be one of my weaknesses. Any funds not necessary to get through the pay period go into savings immediately.

Chris

[RoyGBiv]

One reason I don't have a debit card. I'm a Dave Ramsey fan, but his love for the debit card is where we part ways. A credit card, if you pay it off in full every month is basically a free 30 day loan.



I remember a buddy about 25 years ago telling me the same thing. I started thinking about it, and it struck me, if he could track the debit card charges, why couldn't he track the credit card charges?

I'm the complete opposite. Using a debit card would keep me up at night. Do I have enough in the checking account to make that charge? I pay my credit card off every month, but I never sweat it. When the bill comes, if it is bigger than expected bill, or if I know it's going to be big due to air travel or a big purchase, I just move some money from the savings account to the checking account and pay the bill.

When my youngest first graduated from college, she didn't have the work history for a credit card, but the bank offered her a debit card. She was fairly happy with it, but eventually the bank offered her a credit card, and she began to prefer using the credit card (she also pays off her balance every month). She pretty much only uses her debit card now for the ATM, and uses the credit card for just about everything. She's also noticed the security protocols are more robust with the credit card over the debit card which are both issued by the same bank.

My older daughter recommended to her younger sister, if she's going to keep the debit card, don't keep a whole bunch of cash in her checking account - or whatever account is tied to the debit card - since there is a possibility criminal activity with her debit card could empty out her account. This is not a threat with a credit card.

If you're a college student, with a good credit score**, Discover will give you a credit card with a $500-$1000 limit. Both of my kids did this. Works at gas pumps and lots of retail stores.

** Good Credit...
If you give your kids a credit card on your account, but with their name on it, they will accrue a credit score even if you are paying the bill.
My daughter graduated college with a degree, no job yet, and a >700 credit score.

You can get daily balance messages from pretty much any credit or debit cards these days.

[fatdog]

Credit card, for all the reasons cited by others, disputes, protecting my checking account, etc. My bank makes it possible to pay off my balance from my checking account on line and I do that daily. My debit card is for using the bank's ATM to get cash.

There are some instances where I use the debit card at the grocery or pharmacy. I would never ever use one on line for anything, ever. Around the turn of the century I got burned using my debit card on line and work up one day with an empty bank account. I got it all back but it was a PIA and I had to borrow cash from Mrs. Fatdog there for about 10 days until everything was put back right. Disrupting my checking account is too much disruption in my life.

[Dov]

Recently it seems that I've had to replace debt cards every 6 months or so due to fraud and online use. I'll admit it's convenient but damn the hassle is becoming bothersome. We have debit cards but no credit cards. I understand the difference in that the credit card payment comes due every month and there's a heavy price to pay (interest) if you don't pay the amount due in full. That wouldn't be the case for us as we have no debt other than the day to day stuff like food, utilities and fuel. In other words we don't play the credit/loan game.

I just got off the phone with the bank to dispute two charges in the last few days. About all they would say is we have to investigate this. OK, investigate it, but if I end up paying it the debit card gets cut up.

Anyway, my question to those that only use a credit card, Is this more secure than a debit card. Do credit cards make it easier to track down a charge. I see all manor of coding on debit transactions, including bogus phone numbers, and I can't figure out where some of those charges came from. My wife also uses that card and can't remember if she charged a certain item or not, so it's up to me to figure out if it's legit.

My neighbor, who was in business for a long time and worth a few million, says to ditch the debit cards.

If you have iPhone or Apple Watch Apple Pay with Credit Card would be best https://www.apple.com/apple-pay/

With Apple Pay every transaction uses a single use code instead of actual card number, so even if there is a card skimmer https://krebsonsecurity.com/all-about-skimmers/ on gas pump you can't lose more than one transaction.

You don't even need a SIM card in the Apple device to use Apple pay for transactions, so if your phone is Android you could get a cheap used phone or watch from Apple refurb store https://www.apple.com/shop/refurbished they all come with new batteries is bought from Apple's refurb store

I'm not Apple Fanboy just a nerd, I have Pixel phone & iPhone, Chromebook and Macs, Windows & Linux.

[Borderland]

I just filled out an online app for a credit card and I'll be dropping that off at my bank tomorrow. I may keep my debit card until I see that my credit card is going to work for all my purchases and bills. If it does I'm probably going to cut up my debit card. We don't need the high credit score because we don't use loans for major purchases like vehicles and real estate but it seems more secure.

Thanks for the input.

[Tapatio]

+1 for credit card only. I have an ATM card for when I need cash, fortunately my credit union offers a card that is ATM only even if the default is Debit/ATM. I do most of my spending nowadays with a credit card because it offers cash back (a 1%-2% "discount" on purchases is better than nothing at all) and ALWAYS pay the full balance on time, in full. Not everyone has the luxury of doing that, and it is definitely easier to spend money you don't have with a credit card. The way I look at it is they're giving me an interest-free loan for the month, so, win for me.

If I need to write a check, I write a check, but that's rare nowadays.

Your financial advisor is right, in a way. There are a lot of online banks currently that are offering 5+% interest on a basic savings account; you would be doing yourself a favor by parking some of that extra cash in one of those, earning more money in interest, and just keeping your current low-interest bank account filled up enough for your expenses.

And you are banking with a credit union, aren't you? If not, you should look into it. Big banks are just plain evil, and anyone can join a credit union nowadays.

[mmc45414]

The way we use a credit card is to buy everything with it, accumulate bunches of redeemable points, and pay it off each month to avoid interest.

I use credit cards only for this exact reason, the ease of contesting fraudulent transactions. I never paid interest on a CC balance since I repay it in full monthly right after the statement is issued.

One thing that seems to shy people away from a credit card is getting a runaway bill once a month. We use a CC for everything, and I pretty much mean everything. A few years ago I drove from OH-FL on short notice for a funeral and realized when I got home I only had five bucks with me (I have since stashed a little cash in the truck in a Tuffy lockbox). But what I do is not wait for a statement, I pay it off when either of us gets paid. She has 26 paydays and I get 24, so the timing varies but it doesn't matter, when a paycheck hits the checking account I login and zero out the Mastercard. I realize this screws me on my interest bearing checking account. I also know this is about two dollars.

Your broker is not trying to fleece you by telling you it's unwise to keep a significant amount of money in a single bank account. He probably has a clue what he's talking about.

Yeah, at the same time I zero out the CC I sweep money out of the checking account, it only needs $1500-$2500 in it to cover auto-withdrawals, depending on how long till the next payday(s). ETA: I recently switched the property taxes to monthly, so I cannot cut it as tight as I have in the past.

Another thing I will not do without is text alerts, every time there is a transaction on our cards I get a text message. A few weeks ago we were enjoying our delicious ribs and craft beers at Company 7 BBQ and I got an alert of a charge that was for over $1500, and it damn sure wasn't from Co7. I excused myself and walked out to the parking lot and got the card shutdown and the charge disputed just that quick, the funds were restored the next day.

[TAZ]

Ive gone back and forth between Debit and Credit. Given all the fraud and phishing and God knows what other forms of fraud there are, We have gone to Credit ONLY. You have to have the discipline to pay the damned bill, which is what we lacked before we went to Debit. Thankfully we are win a decent enough financial situation that even if we have a run a way bill we have sufficient cash reserves to pay it. I have weekly alerts to balances so I can track how we are doing on spending and we will at least have a basic understanding of ho we are doing. The Amex I use sends me an alert at EVERY swipe or use, so if my card gets compromised I know it RFN and can despute charges before they even post. All the CC companies I have used (Amex, Citi, Discover...) have been very good wrt quickly dealing with disputed charges. Amex to date being the best. The pretty much reverse anything I call about on the spot and investigate vs investigate and then reverse. Granted Ive, thankfully, only had small charges to deal with.

The thing about my Debit card (Wells Fargo) pretty much state they will investigate and then reverse charges. Now maybe they would give me the benefit of the doubt and reverse charges, but I'm not going to risk it and get put in a spot where I can't pay bills while they investigate. Credit card if charges are in dispute you can always not pay the full amount. Good luck with that if the $$ is already gone from your checking account.