Credit card or Debit card?

[Xylitol]

Well if you're responsible, a credit card. It gives you more freedom

 

[rockyct]

Originally posted by: sandorski
After reading the comments, it struck me that this question would be a good one for a longterm Study. Just to see if everyone's comments remain true and/or to compare the 2 groups on which has more/fewer Financial issues or other such discrepancies that may exist.

It just seems to me that the CC side who "always" Pay their Balances are likely to occasionally have situations beyond their control where they can not do so. Do they recover? Do they lose their Benefits if/when they fail to Pay off in full?

On the flipside, what's the longterm results for the Debit Card user?

I suppose such a study would be very difficult, since the Majority definitely have CCs and the Debit Card exclusive person is likely a small group, but since many seem to have strong opinions on the subject, it would be interesting to know if those opinions hold water or not.

I think a lot of this has to do with the age of the poster. Typically a person starts off with a savings account when they're 16, 18, whatever, but along with that savings account comes a debit card. A debit card is easier than a credit card when you're young. You don't have to worry about interest rates, racking up debt, etc. It's just a plastic card that represents your wad of cash. With the number of warnings from parents and society in general, it would be easy to think that using a credit card is irresponsible and it could easily be at that age. However, once you get older, you realize that credit cards exist for a reason and there are considerable rewards for fiscal maturity.

Credit cards:

1) protect your money - someone steals your credit card, it's an annoyance, but not a major problem. Same thing happens with your debit card, the money is instantly gone from your account and odds are you're account is frozen until they clear it up. Yeah, that's handy.

2) get a little more out of your money - like everyone else says here, the rewards programs do add up and you didn't have to do a thing except sign your name instead of typing four numbers. There is also something to be said for up to a 30 day interest free loan.

3) Are helpful in emergencies. Although it's never a good idea to carry a balance, credit cards can be ok as a short term loan if your rate is good enough. Obviously, this should be avoided and you should cut your cards up if it becomes even a semi-regular occurrence, but there is something to be said for having access to money in emergencies.

 

[konakona]

I was gonna say not everyone uses debit by choice; then I came across this:

http://wiki.answers.com/Q/Can_...Social_Security_number

lol, looks like an easy way to make a grand? Nah, still looks like too much trouble. I will just sit and wait for a month or so. Having social wasnt without its upside - whenever I get bugged by these pesty telemarketers trying to get you signed up for a CC, I would just tell them I have no SSN and then they just tell me to have a good day and hang up immediately

 

[sandorski]

Originally posted by: rockyct

Originally posted by: sandorski
After reading the comments, it struck me that this question would be a good one for a longterm Study. Just to see if everyone's comments remain true and/or to compare the 2 groups on which has more/fewer Financial issues or other such discrepancies that may exist.

It just seems to me that the CC side who "always" Pay their Balances are likely to occasionally have situations beyond their control where they can not do so. Do they recover? Do they lose their Benefits if/when they fail to Pay off in full?

On the flipside, what's the longterm results for the Debit Card user?

I suppose such a study would be very difficult, since the Majority definitely have CCs and the Debit Card exclusive person is likely a small group, but since many seem to have strong opinions on the subject, it would be interesting to know if those opinions hold water or not.

I think a lot of this has to do with the age of the poster. Typically a person starts off with a savings account when they're 16, 18, whatever, but along with that savings account comes a debit card. A debit card is easier than a credit card when you're young. You don't have to worry about interest rates, racking up debt, etc. It's just a plastic card that represents your wad of cash. With the number of warnings from parents and society in general, it would be easy to think that using a credit card is irresponsible and it could easily be at that age. However, once you get older, you realize that credit cards exist for a reason and there are considerable rewards for fiscal maturity.

Credit cards:

1) protect your money - someone steals your credit card, it's an annoyance, but not a major problem. Same thing happens with your debit card, the money is instantly gone from your account and odds are you're account is frozen until they clear it up. Yeah, that's handy.

2) get a little more out of your money - like everyone else says here, the rewards programs do add up and you didn't have to do a thing except sign your name instead of typing four numbers. There is also something to be said for up to a 30 day interest free loan.

3) Are helpful in emergencies. Although it's never a good idea to carry a balance, credit cards can be ok as a short term loan if your rate is good enough. Obviously, this should be avoided and you should cut your cards up if it becomes even a semi-regular occurrence, but there is something to be said for having access to money in emergencies.

This is why I think a Study needs to be convened. Your 3 Points sound logical, but do they truly bear out in the real world? For eg: Point #1 re Theft: Debit: Thief needs to know PIN number, CC they don't. Perhaps the consequences of the theif figuring out your PIN is more dire, but what are the chances that they do?

 

[Extelleron]

Overall, it's better to use a credit card as long as you are responsible and will pay the bill every month before you have to pay any interest. As others have said, if you pay before interest, there's no reason NOT to use a credit card, and there are some benefits, such as cash back from purchases that adds up.

Of course, shopping with a piece of plastic in your wallet that gives you instant access to $5k-$10k will often make you spend more than you would if you were paying cash. If you can't fight off the urge to spend more than you have, then you're better off using a debit card for most purchases.

There's also some things that debit cards are bad for... you've got to constantly watch your balance, for overdraft, and you can't use them online (if they get stolen, you're screwed, if a credit card gets stolen, it's just a temporary PITA).

I think overall, they both have their purposes, and it just depends on how disciplined of a spender you are and what you're doing.

 

[Spikesoldier]

Originally posted by: RossMAN

Originally posted by: Staples
Debit cards. I hate banks enough not to want to make them rich.

How are you making the banks rich if:

1) You don't pay an annual fee.
2) You don't pay a penny in finance (interest) charges?
3) They pay you up to 5% in rewards including an extra year of warranty coverage for free?

you make the banks rich every time you swipe your credit card.

there is a processing fee that the bank lops off the retailer for taking cc as a payment.

if i really like the store and there is a debit credit option, i will usually choose debit since they get the full amount.

i like to do this at the AAFES PX because by protocol a percentage of profits will go back to the soldiers in the forms of family programs, recreational facilities and other things that boost quality of life for them and their dependants.

 

[fallenangel99]

I use my CC every time even if the charge is <$5.00. I pay off my balances in full every month.

Currently, I manually pay off my CC bills using my checking account Bill Pay. In the future, I might do an auto pay, but I am very deliberate about my finances and I like to micro manage everything.

 

[imported_Imp]

Originally posted by: Spikesoldier

Originally posted by: RossMAN

Originally posted by: Staples
Debit cards. I hate banks enough not to want to make them rich.

How are you making the banks rich if:

1) You don't pay an annual fee.
2) You don't pay a penny in finance (interest) charges?
3) They pay you up to 5% in rewards including an extra year of warranty coverage for free?

you make the banks rich every time you swipe your credit card.

there is a processing fee that the bank lops off the retailer for taking cc as a payment.

if i really like the store and there is a debit credit option, i will usually choose debit since they get the full amount.

i like to do this at the AAFES PX because by protocol a percentage of profits will go back to the soldiers in the forms of family programs, recreational facilities and other things that boost quality of life for them and their dependants.

Ya, I sometimes feel bad about using my CC for sub-$10 amounts, especially if I frequent that store a lot *cough* Staples. However, I rarely carry more than $20 cash, rarely keep more than $5 over the placeholder amount (so you don't get charged bs service fees) of my Debit/Chequing account. So, I've managed to justify it to myself with the following: if you didn't want people paying with credit, you shouldn't have allowed their use in the first place.

As for the question about "responsible" people going overboard occasonally: it can happen. I had a bit of trouble killing my $1k balance last last month cause I did go a bit too wild. Still, it was more painful than difficult having to burn an entire paycheck in one day to pay it off.

 

[ThePresence]

Originally posted by: MrDudeMan

Originally posted by: ThePresence
Debit card.
I haven't used my CC in 5 years (aside from car rentals which they wont let you use debit).
Too many years of being young and stupid with a CC weigh heavily on my now mature mind.

The only thing I have to say is that you missed out on a lot of free money by thinking you have a clue, when you don't. Your "mature mind" doesn't fully grasp the concept of "no interest charged if paid on time and in full".

Thank you.
Now if you reread my comment carefully, you will see that I'm not saying debit cards are better than CC's at all. I'm just explaining why I personally am scared of CC's. Just a feeling I have. It has to do with my irresponsible behavior when I was much younger.

 

[mh47g]

Originally posted by: ThePresence

Originally posted by: MrDudeMan

Originally posted by: ThePresence
Debit card.
I haven't used my CC in 5 years (aside from car rentals which they wont let you use debit).
Too many years of being young and stupid with a CC weigh heavily on my now mature mind.

The only thing I have to say is that you missed out on a lot of free money by thinking you have a clue, when you don't. Your "mature mind" doesn't fully grasp the concept of "no interest charged if paid on time and in full".

Thank you.
Now if you reread my comment carefully, you will see that I'm not saying debit cards are better than CC's at all. I'm just explaining why I personally am scared of CC's. Just a feeling I have. It has to do with my irresponsible behavior when I was much younger.

You are not alone...

 

[bonkers325]

credit cards on big purchases that i might need protection on (bills, electronics). debit for groceries and other smaller purchases

 

[Fraggable]

Debit card. It comes right out of my checking account so I always know exactly what I have to spend.

My debit card gives 1-2% cash back on purchases too, so I have no realy reason to use my credit card on a regular basis. I still use credit for larger purchases or if I want no interest for a while. I usually keep a card with 0% interest for a year and use that for things I find in Hot Deals that I don't have cash for right now but need to jump on, or to buy parts for computers I build for my customers. Never paid a cent in interest.

 

[crystal]

To keep everything simple, I will use the American Express at any places that take Amex. Otherwise, I will use my debit master card. Only 1 bill to take care of at the end of the month.

 

[krunchykrome]

I pay for most things with my debit card. I still get reward points for using it. For gas, I use a specific credit card because I get a better reward for using it.

 

[alimoalem]

lots of places don't ask for ID/PIN when using your debit card. a person that steals your card could just as easily go to a gas station, fast food, some restaurants, online, etc. without needing a pin. and those with a Visa/Mastercard logo on them can be used as a "credit card" so instead of inputting a PIN, the thief can choose credit on the swiping machine and forge a signature.

those that claim debit is just as safe or safer haven't been through anything that warrants need for protection. i've been screwed and out of money for 3 weeks from my primary checking account and after going through signing an affidavit, etc., the bank still didn't refund me the overdraft fee.

even though debit cards are linked to your checking account, you don't know how much cash you have available by staring at your card. you have to go online or to an ATM machine to see how much you have. how is doing this to find out how much you can spend on your credit card any different? if you have a $10K credit limit but you check your checking account and see you have $5k, you'll know you can't afford more than $5k.

 

[V00DOO]

I only use credit card since I asked my bank for a regular ATM instead of debit card.

 

[LakerGod]

Credit card. For the same simple reasons of rewards and time value of money.

 

[Bill Brasky]

I didn't read the whole thread, but what about building a good line of credit? It helps immensely when getting a loan.

 

[Apex]

Credit card, safety and reward over negation of poor money management.

 

[oogabooga]

I voted Credit Card.

Originally posted by: Spikesoldier
you make the banks rich every time you swipe your credit card.

there is a processing fee that the bank lops off the retailer for taking cc as a payment.

if i really like the store and there is a debit credit option, i will usually choose debit since they get the full amount.

i like to do this at the AAFES PX because by protocol a percentage of profits will go back to the soldiers in the forms of family programs, recreational facilities and other things that boost quality of life for them and their dependants.

Merchant usually don't get the full amount of a debit transaction, you make the banks rich when you use your debit card too.

While transactions can be cheaper for debit (since they usually pay a flat rate vs a percentage), they for most processors have to pay to be setup with debit which typically has a monthly fee attached to it.
Not counting the monthly fee, if you pay transactions that are less than 10 bucks with debit it may end up costing the merchant more than if you had just used it as a credit card.

In addition, those pinpads retailers use are kinda pricey. The small verifones run for around 100, the places with the fancy signature captures probably saw them at a cost of 500-1000 bucks. (which arguably doesn't help make the bank rich, but it certainly doesn't save the retailer money)

If they don't ask for your pin code, they ran your debit card as a credit card.

 

[AgaBoogaBoo]

Originally posted by: RossMAN
Credit card and here's why:

--

I pay for everything on my credit card except for small purchases (under $5) and rent.

Why?

• Rewards, perks, incentives, no annual fees, etc.
  Would you turn away free money?
• The usual card benefits including but not limited to free 1 year extended warranty, 90 day returns, 90 day damage and theft protection, Car Rental Loss and Damage Insurance, Travel Accident Insurance and more!
• I get a nice itemized statement every month and one payment to make per cc.
• Credit (and debit) cards offer no liability protection against unauthorized transactions.
• It helps establish and maintain an active and healthy credit history.
• Again would you turn away free money?

Off the top of my head I charge car insurance, utilities, cell phone, internet, magazine subscriptions, lots of web hosting, etc. all to my credit cards.

How much do all these benefits and rewards cost me? $0

Make sure you have a credit card which has no annual fee and pay off your balance in full every month.

Last night I took my wife out for dinner which was charged on my Amex TrueEarnings earning a 3% cash rebate

That's exactly it, and if something happens to the card, it's a seperate account from the accounts with money that matter. You are in control of it and while you should pay it off in full, you can choose to do so or to not to in case you're in a situation where it matters.

Ross made an example to me of getting a lot of fraud charges. If it happens on a debit card, who knows how long it will take to clear up, with a CC, it doesn't matter directly because they aren't holding the funds from your account.

 

[novasatori]

basically what rossman and agaboogaboo said
it shouldn't take much to realize that consumer protection offered by a credit card is way better than a debit card
just don't buy stuff you can't afford, the same as you would do with a debit card, and don't forget to pay...

really, its not hard...

 

[xeemzor]

I pretty much only use credit except when going in for delivery with some friends(1-2 times/wk). Like Rossman, I just can't turn away free perks and money. I have never carried a balance. I haven't checked my credit scores because it doesn't really matter too much right now and I'm too cheap to spend $45. I must be doing something right with the relentless barrage of credit card applications I get in the mail.

 

[AgaBoogaBoo]

Originally posted by: novasatori
basically what rossman and agaboogaboo said
it shouldn't take much to realize that consumer protection offered by a credit card is way better than a debit card
just don't buy stuff you can't afford, the same as you would do with a debit card, and don't forget to pay...

really, its not hard...

You get everything at no extra direct cost to you, should be a no brainer. Treat it just like cash or a debit card and you should be fine.

If you're using a debit card right now, it can only help you. You'll get an extra month to pay things off, so toss that money into a savings account, and make some money. It's just opportunity cost at this point.