Use credit card at stores instead of debit?

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TheHouse7
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Re: Use credit card at stores instead of debit?

Post by TheHouse7 »

I use debt at stores (groceries). I haven't thought about credit cards in years. I wonder what that mental load is worth? Do I just have more time to worry about other things?

I live in a small town and spend $10,000+ per year on only debt.

The more I think about it, a few years ago, I thought about a Costco card for replacing appliances. Never went through with it, but thought about it. :wink:
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Re: Use credit card at stores instead of debit?

Post by galawdawg »

HanSolo wrote: Sun Jul 25, 2021 6:42 am
Watty wrote: Sat Jul 24, 2021 8:04 pm
Broken Man 1999 wrote: Sat Jul 24, 2021 5:10 pm I have never used a debit card. When the credit union sends an ATM/debit card, I call them and they make it an ATM card only.
Me too.

I have even had a bank tell me they no longer issued plain ATM cards and they only issed debit cards now when I called the 800 phone number after they sent me a new debit card to replace my ATM card.

My response was , "OK, let me get your name again so that when I close my accounts in a few weeks I can explain that I am closing them because you would not send me an ATM card." They quickly changed their story and I had an ATM card in the mail in a few days. :twisted:
Any idea if the above will work with Charles Schwab? I have a debit card from them, and they told me they don't offer ATM-only cards. I'd rather not close the account because it reimburses ATM fees overseas.
You can manage your Schwab debit card by going on Schwab's website to Debit Cards & Checks which is under the Service menu. From there you can lock your card and/or set alerts to come to you via text, email and/or mobile app notification. The alerts you can set are: Purchases more than $_______, ATM withdrawals more than $___________, any online/phone/mail purchases, and any international purchases.

You can lock and unlock the card and manage alerts on the Schwab mobile app as well. So if you keep your card locked and set alerts as you desire (such as purchases more than $1.00), it should be about as secure as it can get. Just unlock it right before using it at the ATM and lock it right back up!
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galawdawg
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Re: Use credit card at stores instead of debit?

Post by galawdawg »

To the OP's question, I never, ever use a debit card and any debit cards I receive from a bank is locked.

As others have pointed out, if your debit card number is compromised, the crooks can drain any linked account(s). While you do have fraud protection, it is a 'reactive' remedy. In other words, if you are a victim of fraud, the money is already gone from your account and you may have already suffered adverse consequences as a result, such as dishonored checks and payments and all that entails. So not only do you need to file a fraud claim and wait for the money to be returned, you have to deal with businesses and individuals to whom you made a payment which was dishonored.

On the other hand, if your credit card number is compromised, the crooks have taken NONE of your money. Instead, the entity that has suffered the loss is your credit card issuer. You simply report the fraud and you don't have to pay for those fraudulent charges. No chasing down your money, no dishonored checks or payments, nothing. Additionally, when you use a credit card, you have opportunities for cashback and other rewards as well as credit card issuer benefits like extended warranties and theft/loss protection.

So I recommend that debit cards be eschewed in favor of credit cards. For those whom overspending on a credit card is a concern, just have the limit set by the issuer at an appropriately low limit (most, if not all issuers will honor a request for a lowered limit).
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Kenkat
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Re: Use credit card at stores instead of debit?

Post by Kenkat »

Debit cards use the same payment network as credit cards, so you are not really exposing your bank account information such as account numbers by using one. As mentioned above, that’s printed on your checks anyway.

It does expose the money in your account to being directly withdrawn which is the main reason I don’t use one - plus reward cards actually work well for me overall as well.
Last edited by Kenkat on Sun Jul 25, 2021 9:02 am, edited 1 time in total.
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RickBoglehead
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Re: Use credit card at stores instead of debit?

Post by RickBoglehead »

TheHouse7 wrote: Sun Jul 25, 2021 7:47 am I use debt at stores (groceries). I haven't thought about credit cards in years. I wonder what that mental load is worth? Do I just have more time to worry about other things?

I live in a small town and spend $10,000+ per year on only debt.

The more I think about it, a few years ago, I thought about a Costco card for replacing appliances. Never went through with it, but thought about it. :wink:
"Mental load"?

$10,000+ on a 2% cashback card is $200+.

Costco gives you a 4 year appliance warranty by buying there and using their card. What's that mental load worth as compared to a standard appliance warranty of 1 year? :wink:


I can't comprehend having to control my spending by doing some of the things that people do, i.e. putting funds into accounts that I can't easily access, setting up buckets in accounts, putting money in envelopes, using debit cards.

That said, what works for you works for you. I may not understand it, but I do understand that some people need more safeguards than I do.
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JoMoney
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Re: Use credit card at stores instead of debit?

Post by JoMoney »

HanSolo wrote: Sun Jul 25, 2021 6:42 am
Watty wrote: Sat Jul 24, 2021 8:04 pm
Broken Man 1999 wrote: Sat Jul 24, 2021 5:10 pm I have never used a debit card. When the credit union sends an ATM/debit card, I call them and they make it an ATM card only.
Me too.

I have even had a bank tell me they no longer issued plain ATM cards and they only issed debit cards now when I called the 800 phone number after they sent me a new debit card to replace my ATM card.

My response was , "OK, let me get your name again so that when I close my accounts in a few weeks I can explain that I am closing them because you would not send me an ATM card." They quickly changed their story and I had an ATM card in the mail in a few days. :twisted:
Any idea if the above will work with Charles Schwab? I have a debit card from them, and they told me they don't offer ATM-only cards. I'd rather not close the account because it reimburses ATM fees overseas.
FWIW, many (perhaps most) banks that only offer debit cards do have the option to change the spending limit on the debit card, so even if you are forced to have a debit card tied to the account you can set the limit to some trivial amount like $1 which minimizes the risk.
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Re: Use credit card at stores instead of debit?

Post by nisiprius »

Can someone explain the exact legal differences (if any) between running a debit card "as debit" and "as credit?" Apparently it involves different entities that do the processing, and merchants are sometimes charged different fees and have a preference... and it is not terribly rare for a glitch to involve a failure to accept a card processed one way, but not the other way. And you need to disclose a PIN number if you are running it as debit, but (frequently, even usually) a zip code if running it as credit.

Is there any difference at all in the degree of protection you have? Are the two kinds of transaction governed by different laws?
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Re: Use credit card at stores instead of debit?

Post by LittleMaggieMae »

ApeAttack wrote: Sun Jul 25, 2021 2:29 am I created a cheat sheet on the back of a business card to help my wife and I keep track of where to use our various credit cards. I occasionally catch her not using the appropriate card for a certain place... oh well. I'm sure I do plenty of things not to her liking. :P
I use a bit of painters tape (or washi tape) stuck to the credit card. I write what 5% (or whatever bonus) and category on the tape. I do switch around my cards so that card(s) for "Gas" and "Grocery" with the highest cash back are in my wallet. I don't eat out much so missing out on a restaurant bonus isn't a big deal. OR I might remember to take the restaurant bonus card if know ahead of time I will be eating at a restaurant.

Since I'm rarely giving my card to someone to "run it thru" the card reader - I don't get many weird looks about the piece of sometimes brightly colored tape on my CC. And the tape is a visual clue for me to remember to think about which card to use at the time of purchase.

FWIW: you can use clear scotch tape - but sometimes it's hard to read what you write on it because of the design/color of the credit card.
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Re: Use credit card at stores instead of debit?

Post by slowandsteadywins »

ApeAttack wrote: Sun Jul 25, 2021 2:29 am
Broken Man 1999 wrote: Sat Jul 24, 2021 5:10 pm I use rewards cards for any purchase that doesn't charge a use fee. DW, OTOH uses her debit card far more than her credit cards. She misses a lot of rewards. :oops:
I created a cheat sheet on the back of a business card to help my wife and I keep track of where to use our various credit cards. I occasionally catch her not using the appropriate card for a certain place... oh well. I'm sure I do plenty of things not to her liking. :P
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diy60
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Re: Use credit card at stores instead of debit?

Post by diy60 »

We use a debit card approximately once, maybe twice per year to draw money from the ATM. This money is usually used as seasonal or birthday dollar gifts to the grandkids. We use a credit card for 100% of all purchases, no amount too small. My credit card bill is $xxxx.xx within in a few hundred dollars each month, except for our predictable 2 high expense months. We haven't balanced our check book in over 40 years. We do however perform a quick scan of all statements each month mainly to make sure we get our refunds/returns properly credited.
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JoMoney
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Re: Use credit card at stores instead of debit?

Post by JoMoney »

nisiprius wrote: Sun Jul 25, 2021 10:34 am Can someone explain the exact legal differences (if any) between running a debit card "as debit" and "as credit?" Apparently it involves different entities that do the processing, and merchants are sometimes charged different fees and have a preference... and it is not terribly rare for a glitch to involve a failure to accept a card processed one way, but not the other way. And you need to disclose a PIN number if you are running it as debit, but (frequently, even usually) a zip code if running it as credit.

Is there any difference at all in the degree of protection you have? Are the two kinds of transaction governed by different laws?
Both the consumer protection laws and credit card policies regarding debit and credit transactions are different.
https://www.consumer.ftc.gov/articles/0 ... ebit-cards
Under the FCBA, your liability for unauthorized use of your credit card tops out at $50. However, if you report the loss before your credit card is used, the FCBA says you are not responsible for any charges you didn’t authorize. If your credit card number is stolen, but not the card, you are not liable for unauthorized use.

If you report an ATM or debit card missing before someone uses it, the EFTA says you are not responsible for any unauthorized transactions. If someone uses your ATM or debit card before you report it lost or stolen, your liability depends on how quickly you report it:

Before any unauthorized charges are made. $0

Within 2 business days after you learn about the loss or theft. $50

More than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you, $500

More than 60 calendar days after your statement is sent to you. All the money taken from your ATM/debit card acount, and possibly more; for example, money in accounts linked to your debit account.
...
If someone makes unauthorized transactions with your debit card number, but your card is not lost, you are not liable for those transactions if you report them within 60 days of your statement being sent to you.
...
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diy60
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Re: Use credit card at stores instead of debit?

Post by diy60 »

nisiprius wrote: Sun Jul 25, 2021 10:34 am Is there any difference at all in the degree of protection you have? Are the two kinds of transaction governed by different laws?
This is not answering your question, but a few years ago my credit card info was breached to the point my credit card was replaced by the bank 3 times within about 10 months. This would have caused me some anxiety if it was my debit/ATM card. Hence, I use my credit card for 100% of ALL purchases.
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Re: Use credit card at stores instead of debit?

Post by HENRYGRUGER »

montanagirl wrote: Sat Jul 24, 2021 4:49 pm I got in a discussion on another forum with someone who says it's crazy to use debit cards at stores, that if they fell into the wrong hands someone could access all your banking info.

Now that I have an unused heloc showing up in my accounts that does rather worry me. I already use my cc for online pickup orders.

Should I be concerned? I don't need to build up my credit or anything.
Valid Concern. That's why I never use a Debit Card. Are you "protected?" Sure, but the hassle to get your money back is just NOT worth it.

On the other hand, I use a Capital One Quicksilver card for 100% of ALL purchases and bill paying, that I can. Of course, I pay it off monthly. And of course, No Fee.

My wife and I have separate accounts, so in addition, we both received a $200 bonus for spending the required amount within 90 days of card receipt.

From June 2020 through June 2021, I earned $925 in rewards dollars, just on my card. Quicksilver pays 1.5% on all purchases. Not sure if there are others out there that pay more, but I enjoy this one.

I originally used my Harley Davidson Visa exclusively, but those dollars are only good for Harley purchases...and I have all the accessories I can fit on my bike. HA! (I have a 2015 Tri-Glide Ultra, with every single "Willie G" accessory available.)

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Re: Use credit card at stores instead of debit?

Post by invest4 »

I do not use debit for all the reasons mentioned by others with the most compelling being that it is someone else's money at risk vs your own. If the bank sends me a debit card, I simply cut them up. An ATM card is potentially useful and we have one somewhere, but I couldn't tell you the last time I ever used one.

My sense is that debit cards are very popular amongst younger people. I ask my own kids about this and the two main reasons I hear are:

* Friends use it because their parents told them it will help them avoid taking on credit card debt (I believe often reflecting the parents own experiences).

* It's what the banks give you when you establish an account

Of course, another valid reason is that the kids may be too young to have their own credit card yet. In the case of our family, we add kids as authorized users (typically at age 15) on one of our credit cards (same card for all the kids), They are each assigned their own number by the credit card company so tracking of spending is easy...such as in instances where they need to pay us back for a purchase for example. We strongly believe this setup and the discussions that accompany it is a vital foundation for understanding and responsible use of credit.

Ultimately, one must simply be informed and then make their personal choice...such as in the case of Nisiprius.
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Re: Use credit card at stores instead of debit?

Post by Tubes »

invest4 wrote: Sun Jul 25, 2021 11:52 am
* It's what the banks give you when you establish an account
And banks love them because: 1) They get the kickback amount (2% or so), 2) They don't have to float you any money for any length of time.

Like others, I cut them up. The bank kept feeding them to me trying to get me to turn in my ATM card. I refused. They eventually stopped yet still renew the ATM-only card.
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Re: Use credit card at stores instead of debit?

Post by Xrayman69 »

One Credit card for travel related activities (plane reservations or hotels), another credit card fro all other expenses for 2-4% cash back.

Debit card only for cash withdrawals so I don’t have to physically go into bank, About 3-4 x a year.
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Re: Use credit card at stores instead of debit?

Post by ApeAttack »

LittleMaggieMae wrote: Sun Jul 25, 2021 10:39 am
ApeAttack wrote: Sun Jul 25, 2021 2:29 am I created a cheat sheet on the back of a business card to help my wife and I keep track of where to use our various credit cards. I occasionally catch her not using the appropriate card for a certain place... oh well. I'm sure I do plenty of things not to her liking. :P
I use a bit of painters tape (or washi tape) stuck to the credit card. I write what 5% (or whatever bonus) and category on the tape. I do switch around my cards so that card(s) for "Gas" and "Grocery" with the highest cash back are in my wallet. I don't eat out much so missing out on a restaurant bonus isn't a big deal. OR I might remember to take the restaurant bonus card if know ahead of time I will be eating at a restaurant.

Since I'm rarely giving my card to someone to "run it thru" the card reader - I don't get many weird looks about the piece of sometimes brightly colored tape on my CC. And the tape is a visual clue for me to remember to think about which card to use at the time of purchase.

FWIW: you can use clear scotch tape - but sometimes it's hard to read what you write on it because of the design/color of the credit card.
Interesting idea. I can put a hamburger sticker on the food card, a car sticker on the gas card, and so on.
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yules
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Re: Use credit card at stores instead of debit?

Post by yules »

oldcomputerguy wrote: Sun Jul 25, 2021 7:03 am My brother used his debit card one day at his local gas pump, and was the unwitting victim of a card skimmer. A day or two later, he found this out by noting that his checking account had been cleaned out.

Credit cards have much better protection against fraudulent activity, and expose the owner to much less liability in cases of fraud than do debit cards. I never, ever use a debit card to purchase anything; all our spending ends up going on credit cards. The only time my debit card leaves my wallet is to access cash at my brick-and-mortar bank's ATM. These days, with touchless credit cards, Apple pay, and online shopping, even that has become very seldom.
Was your brother able to get some or all of his money back? If allowed, please tell that part of the story, as I feel that most of us have had experience trying to get money back from a fraudulent credit card transaction, but not a fraudulent debit card transaction, which contributes some of the unknown quality of whether a debit card provides sufficient protections. Maybe the story of your brother can set us all straight!

Yules
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Re: Use credit card at stores instead of debit?

Post by anonenigma »

anoop wrote: Sun Jul 25, 2021 2:05 am My debit card has a daily limit of $1000 so it cannot take the place of a credit card.
My ATM card is also a debit card, and it arrived with daily limits of $1,000 each for cash withdrawals and debit card purchases. I adjusted the limits down to $300 for each.

I've also set my credit cards to notify me whenever there is a purchase of more than $10. Shortly after I did this, I caught an attempted fraud right after it happened. Called bank and had them issue a new card.
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Re: Use credit card at stores instead of debit?

Post by JackoC »

Jack FFR1846 wrote: Sat Jul 24, 2021 5:25 pm Where a debit card makes sense is for typical Dave Ramsey callers who can't manage credit because they don't see their bank account go down every time a purchase is made.

For people who use credit responsibly, I see zero reason to ever use a debit card. I never use one, ever.
We almost never use debit cards. The two exceptions are a general one, rare purchase of cash-like instruments (somebody, particularly in another country, demands to be paid by money order, international postal reply coupon etc. USPS won't accept CC) and a quirky one we could fix (didn't realize Target had a 5% cash back at Target CC when I set up 5% off at Target DC).

However, I would accept that DC is useful to some people to regulate spending who aren't and haven't been in Dave Ramsey (stereotypical) caller situation. Although it seems in the long explanation above, a poor example of CC cash back is being given. We get order of $3k net CC cashback a year. Admittedly that's pretty finely tuned to the highest cash % available (I only deal in airline points if I get them as bonus for opening a card). And I admit there's some outright hoop jumping (for example pay federal estimated by buying $1k gift cards online at 5.25% CB, pay GC seller ~0.75% in fees which I'm also counting, DC fee of $2+ instead of CC ~2% fee at the tax payment processor). But it's no teaser and no way would I give it up in favor of Zero.

Plus, we really don't need anything even 'regulating' our spending at this point. And I'm extremely skeptical of the strong claim of some anti-CC'ers that it makes you bargain hunt less. I'm pretty absolutely sure that's not true of us. It might make us spend a few more $'s at the margin, but we get a few more $'s worth of goods/services. And we probably spend too little as it is.
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Re: Use credit card at stores instead of debit?

Post by oldcomputerguy »

yules wrote: Sun Jul 25, 2021 12:13 pm
oldcomputerguy wrote: Sun Jul 25, 2021 7:03 am My brother used his debit card one day at his local gas pump, and was the unwitting victim of a card skimmer. A day or two later, he found this out by noting that his checking account had been cleaned out.

Credit cards have much better protection against fraudulent activity, and expose the owner to much less liability in cases of fraud than do debit cards. I never, ever use a debit card to purchase anything; all our spending ends up going on credit cards. The only time my debit card leaves my wallet is to access cash at my brick-and-mortar bank's ATM. These days, with touchless credit cards, Apple pay, and online shopping, even that has become very seldom.
Was your brother able to get some or all of his money back? If allowed, please tell that part of the story, as I feel that most of us have had experience trying to get money back from a fraudulent credit card transaction, but not a fraudulent debit card transaction, which contributes some of the unknown quality of whether a debit card provides sufficient protections. Maybe the story of your brother can set us all straight!

Yules
I heard about this from my mom, not from him, and she told me that he did finally get his money back, but I don't know any details over and above that. Sorry.
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Re: Use credit card at stores instead of debit?

Post by Ivygirl »

invest4 wrote: Sun Jul 25, 2021 11:52 am I do not use debit for all the reasons mentioned by others with the most compelling being that it is someone else's money at risk vs your own. If the bank sends me a debit card, I simply cut them up. An ATM card is potentially useful and we have one somewhere, but I couldn't tell you the last time I ever used one.

My sense is that debit cards are very popular amongst younger people. I ask my own kids about this and the two main reasons I hear are:

* Friends use it because their parents told them it will help them avoid taking on credit card debt (I believe often reflecting the parents own experiences).

* It's what the banks give you when you establish an account

Of course, another valid reason is that the kids may be too young to have their own credit card yet. In the case of our family, we add kids as authorized users (typically at age 15) on one of our credit cards (same card for all the kids), They are each assigned their own number by the credit card company so tracking of spending is easy...such as in instances where they need to pay us back for a purchase for example. We strongly believe this setup and the discussions that accompany it is a vital foundation for understanding and responsible use of credit.

Ultimately, one must simply be informed and then make their personal choice...such as in the case of Nisiprius.
Don't you think, in general, it is a good idea for young people to manage their own money before they try to manage credit? There are a lot of financial differences between being a kid, a college student, an independent adult. Learning what things cost. Learning what can be put off and what must be paid now. Surprise: the 6-month car insurance bill is due, you forgot. Roommate or significant other asks you to cover some expenses this month, they'll pay you back. An optimistic, obliging and kindhearted young person might pull out a credit card for that, relying on the "float." We people older than 25 can see what's coming from that. In a few years, with experience of the world, our young person will be wiser, but understanding compound interest - either being on the receiving end, or on the paying end - is not intuitive. Being on the paying end is brutal indeed, it's a real danger.

Young people are smart to stay away from credit for daily expenses. It's easy to dig a hole that can devour years. Your children of course are an exception because you are teaching them in a gradual, managed manner. but many young people have no one to do this for them.
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Re: Use credit card at stores instead of debit?

Post by hicabob »

Winco, a boglehead type supermarket in the PNW, just takes debit cards or cash. It's the only reason I carry my debit card.
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Re: Use credit card at stores instead of debit?

Post by ResearchMed »

Ivygirl wrote: Sun Jul 25, 2021 1:29 pm
invest4 wrote: Sun Jul 25, 2021 11:52 am I do not use debit for all the reasons mentioned by others with the most compelling being that it is someone else's money at risk vs your own. If the bank sends me a debit card, I simply cut them up. An ATM card is potentially useful and we have one somewhere, but I couldn't tell you the last time I ever used one.

My sense is that debit cards are very popular amongst younger people. I ask my own kids about this and the two main reasons I hear are:

* Friends use it because their parents told them it will help them avoid taking on credit card debt (I believe often reflecting the parents own experiences).

* It's what the banks give you when you establish an account

Of course, another valid reason is that the kids may be too young to have their own credit card yet. In the case of our family, we add kids as authorized users (typically at age 15) on one of our credit cards (same card for all the kids), They are each assigned their own number by the credit card company so tracking of spending is easy...such as in instances where they need to pay us back for a purchase for example. We strongly believe this setup and the discussions that accompany it is a vital foundation for understanding and responsible use of credit.

Ultimately, one must simply be informed and then make their personal choice...such as in the case of Nisiprius.
Don't you think, in general, it is a good idea for young people to manage their own money before they try to manage credit? There are a lot of financial differences between being a kid, a college student, an independent adult. Learning what things cost. Learning what can be put off and what must be paid now. Surprise: the 6-month car insurance bill is due, you forgot. Roommate or significant other asks you to cover some expenses this month, they'll pay you back. An optimistic, obliging and kindhearted young person might pull out a credit card for that, relying on the "float." We people older than 25 can see what's coming from that. In a few years, with experience of the world, our young person will be wiser, but understanding compound interest - either being on the receiving end, or on the paying end - is not intuitive. Being on the paying end is brutal indeed, it's a real danger.

Young people are smart to stay away from credit for daily expenses. It's easy to dig a hole that can devour years. Your children of course are an exception because you are teaching them in a gradual, managed manner. but many young people have no one to do this for them.
You are assuming that "credit cards" are used for "borrowing" - meaning *not* paying off the charges each month.
I suspect many (most?) of the BH members here discussing the merits of using charge vs debit cards are *not* running credit balances and thus paying usually outrageous interest rates. And they are probably planning to help their family members to adapt this strategy with charge cards.

Helping someone younger to establish credit AND to be responsible with money can both be done with "charge" cards, with the understanding that the charge(s) are paid off every month without fail.
IF one is really concerned that the person (of any age) will "forget that they charged money already this month" or such, then it could be arranged at the start that after each charge, they log in, and PAY off that charge, setting the amount "owed" back to... zero. That also would satisfy the concern that they could "see" the drop in a checking account, which would be debited when each charge is paid.
But many people will never need to use this strategy to "keep in mind what they are spending".

Also, one could set a very low credit limit at first. Enough to cover what might be needed for a couple of days (gas? quick meal out? emergency inexpensive motel if stranded or such?) - withOUT overdraft!

Over time, the credit limit could be raised, perhaps in conjunction with the person's change in life circumstances and thus slowly increasing income and spending. One could keep the limit relatively low as long as preferred, of course, if one really feels there is difficulty controlling spending. (But that is really a separate problem, one that probably should be addressed other than by limiting exposure to 'good credit'.)
And part of this would likely include explaining the risks of using debit cards, the primary one being loss of access to one's money while it gets sorted out, even if it does indeed eventually "get sorted out".

This would be a way to help them learn to *manage* credit rather than to avoid it entirely. Most people will indeed want to use credit eventually, at least to purchase a home. And a good credit history, one that is also a long credit history, will help with lower rates.

RM
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Re: Use credit card at stores instead of debit?

Post by Tubes »

ResearchMed wrote: Sun Jul 25, 2021 1:47 pm
You are assuming that "credit cards" are used for "borrowing" - meaning *not* paying off the charges each month.
I suspect many (most?) of the BH members here discussing the merits of using charge vs debit cards are *not* running credit balances and thus paying usually outrageous interest rates. And they are probably planning to help their family members to adapt this strategy with charge cards.

Helping someone younger to establish credit AND to be responsible with money can both be done with "charge" cards, with the understanding that the charge(s) are paid off every month without fail.
IF one is really concerned that the person (of any age) will "forget that they charged money already this month" or such, then it could be arranged at the start that after each charge, they log in, and PAY off that charge, setting the amount "owed" back to... zero. That also would satisfy the concern that they could "see" the drop in a checking account, which would be debited when each charge is paid.
But many people will never need to use this strategy to "keep in mind what they are spending".
This is where I get tunnel vision. I've never had a balance. My mom taught me right. Always pay it off. I forget people actually only pay minimum.

Admittedly, the idea of credit can intoxicate some and it takes good teaching to help them avoid this. So, I understand why some may want their youngsters to use debit cards. But as ResearchMed details, it is possible to teach them the other way.
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Re: Use credit card at stores instead of debit?

Post by ResearchMed »

Tubes wrote: Sun Jul 25, 2021 2:05 pm
ResearchMed wrote: Sun Jul 25, 2021 1:47 pm
You are assuming that "credit cards" are used for "borrowing" - meaning *not* paying off the charges each month.
I suspect many (most?) of the BH members here discussing the merits of using charge vs debit cards are *not* running credit balances and thus paying usually outrageous interest rates. And they are probably planning to help their family members to adapt this strategy with charge cards.

Helping someone younger to establish credit AND to be responsible with money can both be done with "charge" cards, with the understanding that the charge(s) are paid off every month without fail.
IF one is really concerned that the person (of any age) will "forget that they charged money already this month" or such, then it could be arranged at the start that after each charge, they log in, and PAY off that charge, setting the amount "owed" back to... zero. That also would satisfy the concern that they could "see" the drop in a checking account, which would be debited when each charge is paid.
But many people will never need to use this strategy to "keep in mind what they are spending".
This is where I get tunnel vision. I've never had a balance. My mom taught me right. Always pay it off. I forget people actually only pay minimum.

Admittedly, the idea of credit can intoxicate some and it takes good teaching to help them avoid this. So, I understand why some may want their youngsters to use debit cards. But as ResearchMed details, it is possible to teach them the other way.
Ah... you have tunnel vision because you are a TUBE! :D

But nice that you agree. :wink:

indeed, in some cases, perhaps helping someone just getting started to PAY those bills promptly and entirely will help them to avoid that other outcome, the credit card debt cycle.

RM
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Re: Use credit card at stores instead of debit?

Post by Ivygirl »

ResearchMed wrote: Sun Jul 25, 2021 1:47 pm
Ivygirl wrote: Sun Jul 25, 2021 1:29 pm
invest4 wrote: Sun Jul 25, 2021 11:52 am I do not use debit for all the reasons mentioned by others with the most compelling being that it is someone else's money at risk vs your own. If the bank sends me a debit card, I simply cut them up. An ATM card is potentially useful and we have one somewhere, but I couldn't tell you the last time I ever used one.

My sense is that debit cards are very popular amongst younger people. I ask my own kids about this and the two main reasons I hear are:

* Friends use it because their parents told them it will help them avoid taking on credit card debt (I believe often reflecting the parents own experiences).

* It's what the banks give you when you establish an account

Of course, another valid reason is that the kids may be too young to have their own credit card yet. In the case of our family, we add kids as authorized users (typically at age 15) on one of our credit cards (same card for all the kids), They are each assigned their own number by the credit card company so tracking of spending is easy...such as in instances where they need to pay us back for a purchase for example. We strongly believe this setup and the discussions that accompany it is a vital foundation for understanding and responsible use of credit.

Ultimately, one must simply be informed and then make their personal choice...such as in the case of Nisiprius.
Don't you think, in general, it is a good idea for young people to manage their own money before they try to manage credit? There are a lot of financial differences between being a kid, a college student, an independent adult. Learning what things cost. Learning what can be put off and what must be paid now. Surprise: the 6-month car insurance bill is due, you forgot. Roommate or significant other asks you to cover some expenses this month, they'll pay you back. An optimistic, obliging and kindhearted young person might pull out a credit card for that, relying on the "float." We people older than 25 can see what's coming from that. In a few years, with experience of the world, our young person will be wiser, but understanding compound interest - either being on the receiving end, or on the paying end - is not intuitive. Being on the paying end is brutal indeed, it's a real danger.

Young people are smart to stay away from credit for daily expenses. It's easy to dig a hole that can devour years. Your children of course are an exception because you are teaching them in a gradual, managed manner. but many young people have no one to do this for them.
You are assuming that "credit cards" are used for "borrowing" - meaning *not* paying off the charges each month.
I suspect many (most?) of the BH members here discussing the merits of using charge vs debit cards are *not* running credit balances and thus paying usually outrageous interest rates. And they are probably planning to help their family members to adapt this strategy with charge cards.

Helping someone younger to establish credit AND to be responsible with money can both be done with "charge" cards, with the understanding that the charge(s) are paid off every month without fail.
IF one is really concerned that the person (of any age) will "forget that they charged money already this month" or such, then it could be arranged at the start that after each charge, they log in, and PAY off that charge, setting the amount "owed" back to... zero. That also would satisfy the concern that they could "see" the drop in a checking account, which would be debited when each charge is paid.
But many people will never need to use this strategy to "keep in mind what they are spending".

Also, one could set a very low credit limit at first. Enough to cover what might be needed for a couple of days (gas? quick meal out? emergency inexpensive motel if stranded or such?) - withOUT overdraft!

Over time, the credit limit could be raised, perhaps in conjunction with the person's change in life circumstances and thus slowly increasing income and spending. One could keep the limit relatively low as long as preferred, of course, if one really feels there is difficulty controlling spending. (But that is really a separate problem, one that probably should be addressed other than by limiting exposure to 'good credit'.)
And part of this would likely include explaining the risks of using debit cards, the primary one being loss of access to one's money while it gets sorted out, even if it does indeed eventually "get sorted out".

This would be a way to help them learn to *manage* credit rather than to avoid it entirely. Most people will indeed want to use credit eventually, at least to purchase a home. And a good credit history, one that is also a long credit history, will help with lower rates.

RM
Using a credit card *is* borrowing, that is what the word credit means. A person with low income, starting out in life and needing just about everything from clothes for work to a frying pan to a vacuum cleaner, is at particular risk from credit. Needs are urgent (they really are, it isn't bogus stuff), the days between paydays are long, the credit card offers to solve your problem.

The arrangement of logging in to the credit card site and paying off each purchase might be great, if it didn't rely on willpower for every purchase. Um no, likely fail. We only have so much of that willpower stuff. Get sick, get involved in someone else's problems, a power failure ruined all the food in your fridge, get dumped by the one you are dating and go out to drown your sorrows with ice cream and retail therapy - goodbye willpower, hello debt.

It seems to me this is a MUCH greater danger to a young person's financial stability than the chance of a debit card compromise. Elaborate systems have multiple points of failure. Simple systems anyone can manage, even when on cold medicine.

Yes good credit is important but there is time for that, some lower rate on some house they are not going to be ready to buy for 10 years should not be the tail wagging the dog, should it?
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Re: Use credit card at stores instead of debit?

Post by ResearchMed »

Ivygirl wrote: Sun Jul 25, 2021 2:21 pm
ResearchMed wrote: Sun Jul 25, 2021 1:47 pm
Ivygirl wrote: Sun Jul 25, 2021 1:29 pm
invest4 wrote: Sun Jul 25, 2021 11:52 am I do not use debit for all the reasons mentioned by others with the most compelling being that it is someone else's money at risk vs your own. If the bank sends me a debit card, I simply cut them up. An ATM card is potentially useful and we have one somewhere, but I couldn't tell you the last time I ever used one.

My sense is that debit cards are very popular amongst younger people. I ask my own kids about this and the two main reasons I hear are:

* Friends use it because their parents told them it will help them avoid taking on credit card debt (I believe often reflecting the parents own experiences).

* It's what the banks give you when you establish an account

Of course, another valid reason is that the kids may be too young to have their own credit card yet. In the case of our family, we add kids as authorized users (typically at age 15) on one of our credit cards (same card for all the kids), They are each assigned their own number by the credit card company so tracking of spending is easy...such as in instances where they need to pay us back for a purchase for example. We strongly believe this setup and the discussions that accompany it is a vital foundation for understanding and responsible use of credit.

Ultimately, one must simply be informed and then make their personal choice...such as in the case of Nisiprius.
Don't you think, in general, it is a good idea for young people to manage their own money before they try to manage credit? There are a lot of financial differences between being a kid, a college student, an independent adult. Learning what things cost. Learning what can be put off and what must be paid now. Surprise: the 6-month car insurance bill is due, you forgot. Roommate or significant other asks you to cover some expenses this month, they'll pay you back. An optimistic, obliging and kindhearted young person might pull out a credit card for that, relying on the "float." We people older than 25 can see what's coming from that. In a few years, with experience of the world, our young person will be wiser, but understanding compound interest - either being on the receiving end, or on the paying end - is not intuitive. Being on the paying end is brutal indeed, it's a real danger.

Young people are smart to stay away from credit for daily expenses. It's easy to dig a hole that can devour years. Your children of course are an exception because you are teaching them in a gradual, managed manner. but many young people have no one to do this for them.
You are assuming that "credit cards" are used for "borrowing" - meaning *not* paying off the charges each month.
I suspect many (most?) of the BH members here discussing the merits of using charge vs debit cards are *not* running credit balances and thus paying usually outrageous interest rates. And they are probably planning to help their family members to adapt this strategy with charge cards.

Helping someone younger to establish credit AND to be responsible with money can both be done with "charge" cards, with the understanding that the charge(s) are paid off every month without fail.
IF one is really concerned that the person (of any age) will "forget that they charged money already this month" or such, then it could be arranged at the start that after each charge, they log in, and PAY off that charge, setting the amount "owed" back to... zero. That also would satisfy the concern that they could "see" the drop in a checking account, which would be debited when each charge is paid.
But many people will never need to use this strategy to "keep in mind what they are spending".

Also, one could set a very low credit limit at first. Enough to cover what might be needed for a couple of days (gas? quick meal out? emergency inexpensive motel if stranded or such?) - withOUT overdraft!

Over time, the credit limit could be raised, perhaps in conjunction with the person's change in life circumstances and thus slowly increasing income and spending. One could keep the limit relatively low as long as preferred, of course, if one really feels there is difficulty controlling spending. (But that is really a separate problem, one that probably should be addressed other than by limiting exposure to 'good credit'.)
And part of this would likely include explaining the risks of using debit cards, the primary one being loss of access to one's money while it gets sorted out, even if it does indeed eventually "get sorted out".

This would be a way to help them learn to *manage* credit rather than to avoid it entirely. Most people will indeed want to use credit eventually, at least to purchase a home. And a good credit history, one that is also a long credit history, will help with lower rates.

RM
Using a credit card *is* borrowing, that is what the word credit means. A person with low income, starting out in life and needing just about everything from clothes for work to a frying pan to a vacuum cleaner, is at particular risk from credit. Needs are urgent (they really are, it isn't bogus stuff), the days between paydays are long, the credit card offers to solve your problem.

The arrangement of logging in to the credit card site and paying off each purchase might be great, if it didn't rely on willpower for every purchase. Um no, likely fail. We only have so much of that willpower stuff. Get sick, get involved in someone else's problems, a power failure ruined all the food in your fridge, get dumped by the one you are dating and go out to drown your sorrows with ice cream and retail therapy - goodbye willpower, hello debt.

It seems to me this is a MUCH greater danger to a young person's financial stability than the chance of a debit card compromise. Elaborate systems have multiple points of failure. Simple systems anyone can manage, even when on cold medicine.

Yes good credit is important but there is time for that, some lower rate on some house they are not going to be ready to buy for 10 years should not be the tail wagging the dog, should it?
Right, but "the time for learning to manage money" is... when one is starting to manage money.
Why wait until one has more money, and thus might make more expensive 'beginner mistakes'?
Plus, without that earlier credit history, that "future house" may well cost more, because there isn't a strong credit history to qualify for the best mortgage rate.
I'm also not recommending that everyone log in after each purchase; rather, that is a way to start learning *IF* one is having trouble.

We obviously disagree, and so be it.

However, do keep in mind that writing a check is also "borrowing". There might not be any money in the checking account, which would be a bit like charging something you can't pay for. You'd actually face the music faster with a bad check, and there wouldn't be ongoing interest.
To be clear, I am strongly against either "approach" to "learning"!

But the goal should be to help a younger family member to LEARN to manage money.
If someone simply. cannot keep track of paying things off in a timely manner, or in only spending what one can afford (both in terms of actual dollar amounts and whether the purchase is prudent or a frivolous and large expense), then... "No charge card for you!"
:annoyed
And that also means they need extra help learning how to manage money.

If someone is going to drown their sorry with outrageous "retail therapy" (or a trip to Vegas, or whatever), that is a different problem. Yes, a failure of willpower...
However, that is not a function simply of using a "charge" card vs a "debit" card.
A debit card can be drained by frivolous spending, obviously.
There is a different underlying problem to solve. I'm not an expert, but I'd guess that someone who is going to keep getting into trouble with Vegas or retail therapy is also going to be making other unfortunate financial decisions, such as spending too much on a car or clothing or vacation, and thus not saving or using their money for other "better" choices. Again, there is a bigger problem to address.

I gave mid-teens use of a card, with the understanding that they's have only one chance to make a mess of things. They were each very careful not to abuse that trust. And they were learning to manage this while I still had some oversight in case of "trouble", which was, in our minds, part of parenting.

There are clearly two basic schools of thought about 'credit cards' here on BH (and elsewhere). I'm just suggesting that if someone really can't control the use of a 'credit' card, there's probably some bigger underlying financial concern. Or the person just needs to learn how to handle it... and that's back to my main point. THAT version of this problem can be helped with some teaching.

RM
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Re: Use credit card at stores instead of debit?

Post by Ivygirl »

ResearchMed wrote: Sun Jul 25, 2021 2:45 pm If someone is going to drown their sorry with outrageous "retail therapy" (or a trip to Vegas, or whatever), that is a different problem. Yes, a failure of willpower...
However, that is not a function simply of using a "charge" card vs a "debit" card.
A debit card can be drained by frivolous spending, obviously.
There is a different underlying problem to solve. I'm not an expert, but I'd guess that someone who is going to keep getting into trouble with Vegas or retail therapy is also going to be making other unfortunate financial decisions, such as spending too much on a car or clothing or vacation, and thus not saving or using their money for other "better" choices. Again, there is a bigger problem to address.
A failure of willpower is not a failure as a person. It's normal, it's not the end. Ice cream after a bad breakup does not make one a bad person. However, pulling out your debit card to pay for it, you might get a small cone; pulling out a credit card, expect to buy three kinds of Ben & Jerry's for you, your roommate, and all your roommate's girlfriends to consume while you sit on the floor and air how beastly all boys are.

Credit card debt does not generally come from Vegas, it comes from dozens of smaller transactions where desire/need are bigger than the available cash resources. Take my example I gave, the young person's power went out and they lost all the food in the fridge/freezer. Now they feel bad at the rotten luck, they were just beginning to get ahead, they go to the store to buy groceries. Using a debit card, they buy what they need for the week until payday, because that is how much money there is, or else they sadly go home and eat the ramen that is in the cupboard. Using a credit card, they replace everything that got ruined, because the food that was there before sure didn't seem like too much, oh - and also a gallon of Ben & Jerry's with maximum chocolate chunks, chocolate sprinkles, and chocolate cookie dough, the cure for rotten luck.

The "bigger problem to address" is just human nature. Human nature is not failure.
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Re: Use credit card at stores instead of debit?

Post by anon_investor »

A credit card is just like any tool, it can be used properly or improperly by the user.
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Re: Use credit card at stores instead of debit?

Post by sport »

anon_investor wrote: Sun Jul 25, 2021 3:18 pm A credit card is just like any tool, it can be used properly or improperly by the user.
Exactly! We don't tell people not to use fire because they might get burnt. They just need to give the "tool" proper respect.
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Re: Use credit card at stores instead of debit?

Post by Ivygirl »

sport wrote: Sun Jul 25, 2021 3:27 pm
anon_investor wrote: Sun Jul 25, 2021 3:18 pm A credit card is just like any tool, it can be used properly or improperly by the user.
Exactly! We don't tell people not to use fire because they might get burnt. They just need to give the "tool" proper respect.
A credit card does not deserve respect, proper or otherwise. It's a financial product designed to catch human beings by their nature.

Every creature is caught by its nature. They say the way to catch a monkey is to secure a container to the ground that has a narrow mouth, and put a piece of fruit in it. When a monkey puts its hand in to get the fruit, make a big noise and rush forward to grab it. It's terrified but its instinct is to hold on tight to the food when under threat - because monkeys steal from each other - and the container's mouth is too small to remove both hand and food. Its nature is to not let go, and the hunter catches it.

Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
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Re: Use credit card at stores instead of debit?

Post by jmw »

I have a family member who belongs with the Dave Ramsey crowd who are incapable of not overspending. So the credit card is a no go unless I find one someday where I can set sublimits on the fly via my phone. You could give her 5% cashback on everything and she will squander multiples of that reward. To limit the risk, I firewall the emergency fund and the account getting payroll direct deposits and have to manually move money for every little purchase to the debit card. I can't leave $100 in there because it will eventually get squandered. I put the $100 in her Roth and buy any security with a T+3 settlement so it can't be converted to cash quickly. I hope Apple Pay and tap payment becomes universal so that I don't have to worry about the card getting skimmed by the swipe or the combination insert/swipe slot on gas pumps.
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Re: Use credit card at stores instead of debit?

Post by bac »

I've locked my debit card in my bank's app. One can also specify spending limits and alerts, and disable its use at different types of merchants at a fairly granular level. I have a note on the card to unlock it on the increasingly rare occasion I need to get cash from an ATM.

I had been using the debit card regularly to hit 10 purchases a month to qualify for interest on my checking account, but when the bank dropped the rate I decided the extra few dollars a month wasn't worth the effort, especially the months when I had to manufacture spending.
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Re: Use credit card at stores instead of debit?

Post by anon_investor »

Ivygirl wrote: Sun Jul 25, 2021 3:38 pm
sport wrote: Sun Jul 25, 2021 3:27 pm
anon_investor wrote: Sun Jul 25, 2021 3:18 pm A credit card is just like any tool, it can be used properly or improperly by the user.
Exactly! We don't tell people not to use fire because they might get burnt. They just need to give the "tool" proper respect.
A credit card does not deserve respect, proper or otherwise. It's a financial product designed to catch human beings by their nature.

Every creature is caught by its nature. They say the way to catch a monkey is to secure a container to the ground that has a narrow mouth, and put a piece of fruit in it. When a monkey puts its hand in to get the fruit, make a big noise and rush forward to grab it. It's terrified but its instinct is to hold on tight to the food when under threat - because monkeys steal from each other - and the container's mouth is too small to remove both hand and food. Its nature is to not let go, and the hunter catches it.

Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
A CC is just a tool, if you know how to use it, it can be a powerful one that can be used to your advantage. If you use it poorly it can lead to your demise.
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Re: Use credit card at stores instead of debit?

Post by jebmke »

Ivygirl wrote: Sun Jul 25, 2021 3:38 pm Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
I like to think I'm smarter than a monkey. Sometimes my spouse probably disagrees but she is the main user of the credit card so I guess we are safe enough.
Stay hydrated; don't sweat the small stuff
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Re: Use credit card at stores instead of debit?

Post by Ivygirl »

jebmke wrote: Sun Jul 25, 2021 3:56 pm
Ivygirl wrote: Sun Jul 25, 2021 3:38 pm Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
I like to think I'm smarter than a monkey. Sometimes my spouse probably disagrees but she is the main user of the credit card so I guess we are safe enough.
Fruit in a bottle won't catch a human. That trap wasn't made for us.

Credit cards catch humans, though, because they were made for us. Surely you are not exulting that many others get trapped but you were so smart you escaped? And you escape every time, because you are smart? And the more others get caught, the smarter you feel?

The average IQ is 100. What if you were born with an IQ of 90? Do you still escape every time? Remember who made this trap, and how intelligent they are, and how rich.
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Re: Use credit card at stores instead of debit?

Post by flyingcows »

Credit cards offer better rewards and they have better consumer protection. We use the CC for all expenses possible, including utilities where there is a flat fee added for credit card use, but that fee is still less than the cash back. Last year we got $2,200 cash back on $80,000 of expenses, why would I use a debit card instead to pay the same expenses and miss out on the $2,200?
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Re: Use credit card at stores instead of debit?

Post by JackoC »

ResearchMed wrote: Sun Jul 25, 2021 1:47 pm
You are assuming that "credit cards" are used for "borrowing" - meaning *not* paying off the charges each month.
I suspect many (most?) of the BH members here discussing the merits of using charge vs debit cards are *not* running credit balances and thus paying usually outrageous interest rates. And they are probably planning to help their family members to adapt this strategy with charge cards.

Helping someone younger to establish credit AND to be responsible with money can both be done with "charge" cards, with the understanding that the charge(s) are paid off every month without fail.
I think the other side in this has a kind of political attitude about it. I'm not complaining about that, just seems like what it is, so kind of off topic.
The point is whether a given individual should use CC, or who should. It's not about how much you 'like' CC companies (generally the same banks issuing DC's so that's kind of a puzzling theme anyway) or what regulations 'we' should have to force companies to collect and give money in a different way than they do now.

But on topic for this forum, myself and wife using DC would just be dumb. We'd be leaving serious cashback on the table, as well as extended warranties and other purchase protections more typical of CC, and it would be our money to get back if hacked/robbed rather than the bank's money at risk with CC. We have no reason to constrain our spending even if we accept the theory that paying a CC monthly still makes you spend more, which I'm not sure I do accept for us. And we've never run CC debt (except at 0% introductory APR) in...I don't even remember the first CC we got, but decades. It would simply make no sense, on an individual basis in context of a personal financial forum, for us to use DC rather than (highest possible cash back) CC.

That said, our grown kids, early-mid 30's, got into the habit in their 20's of using DC's for almost everything, almost never cash or check, in recent years also Venmo but that's more like DC than CC in terms of spending discipline. They never got CC's. And I never said 'hey, you should get a CC' because some of them have been under financial pressure at times, and one who earns a lot more than the others is also more fond of spending. But now they all have pretty good habits ingrained and recently one of the moderate income low spenders asked me if a CC was good idea to boost credit score, I said sure (although we've also used the trick over the years of having them as authorized users on some of our CC's to raise their scores, without ever giving them a copy of the card).
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Re: Use credit card at stores instead of debit?

Post by sport »

Ivygirl wrote: Sun Jul 25, 2021 3:38 pm
sport wrote: Sun Jul 25, 2021 3:27 pm
anon_investor wrote: Sun Jul 25, 2021 3:18 pm A credit card is just like any tool, it can be used properly or improperly by the user.
Exactly! We don't tell people not to use fire because they might get burnt. They just need to give the "tool" proper respect.
A credit card does not deserve respect, proper or otherwise. It's a financial product designed to catch human beings by their nature.

Every creature is caught by its nature. They say the way to catch a monkey is to secure a container to the ground that has a narrow mouth, and put a piece of fruit in it. When a monkey puts its hand in to get the fruit, make a big noise and rush forward to grab it. It's terrified but its instinct is to hold on tight to the food when under threat - because monkeys steal from each other - and the container's mouth is too small to remove both hand and food. Its nature is to not let go, and the hunter catches it.

Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
You are using "respect" in a different meaning than was used above. In this case, respect is meant to understand that credit cards can be dangerous if used improperly. People should respect the power and possible danger of using a credit card. When used properly, they have a number of advantages. Respecting the credit card companies is an entirely different thing. They will take advantage of you given the opportunity, so I certainly do not respect them. I will agree, however, that there are some people who should not use credit cards.
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Re: Use credit card at stores instead of debit?

Post by JohnFiscal »

Ivygirl wrote: Sun Jul 25, 2021 4:12 pm
jebmke wrote: Sun Jul 25, 2021 3:56 pm
Ivygirl wrote: Sun Jul 25, 2021 3:38 pm Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
I like to think I'm smarter than a monkey. Sometimes my spouse probably disagrees but she is the main user of the credit card so I guess we are safe enough.
Fruit in a bottle won't catch a human. That trap wasn't made for us.

Credit cards catch humans, though, because they were made for us. Surely you are not exulting that many others get trapped but you were so smart you escaped? And you escape every time, because you are smart? And the more others get caught, the smarter you feel?

The average IQ is 100. What if you were born with an IQ of 90? Do you still escape every time? Remember who made this trap, and how intelligent they are, and how rich.
I haven't paid interest on a credit card since around 1988. This is so even though I probably have made charges every month of that period. I pay the balance in full each month. For some time I even had the (old) Amex Green Card, which was a charge card, not a credit card, and I loved that (balance had to be paid in full every month). It's been transmogrified now. Point being that wife and I have about 6-7 credit cards, only one with annual fee (Amex Gold) and it gets the most usage. They don't cause us to overspend, etc. No interest has been due for over 30 years. I'm not one to chase credit card rewards (that's why I liked that Green Card). But I do like the convenience of not carrying large amounts of cash and not using a debit card with its risks.

I suppose I agree with you about banks wanting people on the treadmill to debt and interest. But it doesn't take too much smarts to avoid that.
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Re: Use credit card at stores instead of debit?

Post by Broken Man 1999 »

anon_investor wrote: Sun Jul 25, 2021 3:54 pm
Ivygirl wrote: Sun Jul 25, 2021 3:38 pm
sport wrote: Sun Jul 25, 2021 3:27 pm
anon_investor wrote: Sun Jul 25, 2021 3:18 pm A credit card is just like any tool, it can be used properly or improperly by the user.
Exactly! We don't tell people not to use fire because they might get burnt. They just need to give the "tool" proper respect.
A credit card does not deserve respect, proper or otherwise. It's a financial product designed to catch human beings by their nature.

Every creature is caught by its nature. They say the way to catch a monkey is to secure a container to the ground that has a narrow mouth, and put a piece of fruit in it. When a monkey puts its hand in to get the fruit, make a big noise and rush forward to grab it. It's terrified but its instinct is to hold on tight to the food when under threat - because monkeys steal from each other - and the container's mouth is too small to remove both hand and food. Its nature is to not let go, and the hunter catches it.

Credit card companies catch us by our nature. It's what they do. It's pretty much all they do. No respect.
A CC is just a tool, if you know how to use it, it can be a powerful one that can be used to your advantage. If you use it poorly it can lead to your demise.
Agreed, CC is just a tool. If one can't control their spending impulses, they really shouldn't risk their finances for such a tool. Virtually all my spending for expenses is charged. I honestly cannot remember how long ago I last paid any interest (probably in the late 70ties), and I've never paid a late charge.

Know thyself. Not everyone lacks discipline. Those who do lack discipline can certainly pay some high prices.

Broken Man 1999 (Pretty sure I won't ever have to change my name because of credit card issues to Broke Man 1999!) :D
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nps
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Re: Use credit card at stores instead of debit?

Post by nps »

Not so much a credit vs debit card consideration, but there was a recent article by Jason Zweig on credit cards vs physical cash (may be paywalled):
Dozens of studies have shown that consumers using credit cards rather than cash are less likely to remember how much they spent, take less time deciding what to buy, are more willing to pay high prices and make a greater number of purchases. They also exert less self-control, buying more junk food, luxury goods and other impulsive items.
Presumably these behaviors can result in higher spending on cards even without carrying a balance.
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Re: Use credit card at stores instead of debit?

Post by TheHouse7 »

RickBoglehead wrote: Sun Jul 25, 2021 8:55 am
TheHouse7 wrote: Sun Jul 25, 2021 7:47 am I use debt at stores (groceries). I haven't thought about credit cards in years. I wonder what that mental load is worth? Do I just have more time to worry about other things?

I live in a small town and spend $10,000+ per year on only debt.

The more I think about it, a few years ago, I thought about a Costco card for replacing appliances. Never went through with it, but thought about it. :wink:
"Mental load"?

$10,000+ on a 2% cashback card is $200+.

Costco gives you a 4 year appliance warranty by buying there and using their card. What's that mental load worth as compared to a standard appliance warranty of 1 year? :wink:


I can't comprehend having to control my spending by doing some of the things that people do, i.e. putting funds into accounts that I can't easily access, setting up buckets in accounts, putting money in envelopes, using debit cards.

That said, what works for you works for you. I may not understand it, but I do understand that some people need more safeguards than I do.
I really appreciate the reply; I understand the benefits off the top of my head. Sometimes it isn't a question of if I need more safe guards, but what if I think my spouse needs more safe guards? What if my spouse thinks she needs more safeguards?

We just went back to cash envelope for food and fuel because we weren't updating a budget for a few months. Someone developed a online shopping addiction, and I wouldn't have known if we were not using the same account.

Credit card infidelity scares the crud out of me. YMMV :happy
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Re: Use credit card at stores instead of debit?

Post by RickBoglehead »

TheHouse7 wrote: Sun Jul 25, 2021 5:54 pm
RickBoglehead wrote: Sun Jul 25, 2021 8:55 am
TheHouse7 wrote: Sun Jul 25, 2021 7:47 am I use debt at stores (groceries). I haven't thought about credit cards in years. I wonder what that mental load is worth? Do I just have more time to worry about other things?

I live in a small town and spend $10,000+ per year on only debt.

The more I think about it, a few years ago, I thought about a Costco card for replacing appliances. Never went through with it, but thought about it. :wink:
"Mental load"?

$10,000+ on a 2% cashback card is $200+.

Costco gives you a 4 year appliance warranty by buying there and using their card. What's that mental load worth as compared to a standard appliance warranty of 1 year? :wink:


I can't comprehend having to control my spending by doing some of the things that people do, i.e. putting funds into accounts that I can't easily access, setting up buckets in accounts, putting money in envelopes, using debit cards.

That said, what works for you works for you. I may not understand it, but I do understand that some people need more safeguards than I do.
I really appreciate the reply; I understand the benefits off the top of my head. Sometimes it isn't a question of if I need more safe guards, but what if I think my spouse needs more safe guards? What if my spouse thinks she needs more safeguards?

We just went back to cash envelope for food and fuel because we weren't updating a budget for a few months. Someone developed a online shopping addiction, and I wouldn't have known if we were not using the same account.

Credit card infidelity scares the crud out of me. YMMV :happy
Totally understand. Many years ago I had a boss that constantly complained about his wife spending money. Her response "make more". He took away credit cards, she got them reissued. He got them cancelled, she got store cards. He got those cancelled, she took out cash.

He was telling me this before he left to head home one day, where he would stop and get 4 video rentals for the weekend and takeout food. They ate takeout or went out to dinner 5-6 nights a week. But she was the problem...
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Toons
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Re: Use credit card at stores instead of debit?

Post by Toons »

Cashback
Walmart
Amazon
For Us.....But

I might use a debit card to assist in
next car purchase
:mrgreen:
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Re: Use credit card at stores instead of debit?

Post by jmw »

RickBoglehead wrote: Sun Jul 25, 2021 8:55 am I can't comprehend having to control my spending by doing some of the things that people do, i.e. putting funds into accounts that I can't easily access, setting up buckets in accounts, putting money in envelopes, using debit cards.

That said, what works for you works for you. I may not understand it, but I do understand that some people need more safeguards than I do.
Yep. Maybe household income isn't high enough so there is no room for error. Or maybe there is a shopping addiction by one spouse that has to be dealt with in a draconian manner. For a lot of people, running the household the way Dave would run it with no rewards and debit card risk is absolutely the right way to go instead of chasing rewards or extended warranty benefits.
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Re: Use credit card at stores instead of debit?

Post by Broken Man 1999 »

nps wrote: Sun Jul 25, 2021 5:53 pm Not so much a credit vs debit card consideration, but there was a recent article by Jason Zweig on credit cards vs physical cash (may be paywalled):
Dozens of studies have shown that consumers using credit cards rather than cash are less likely to remember how much they spent, take less time deciding what to buy, are more willing to pay high prices and make a greater number of purchases. They also exert less self-control, buying more junk food, luxury goods and other impulsive items.
Presumably these behaviors can result in higher spending on cards even without carrying a balance.
I believe that is absolutely true for some. I don't understand it myself, as adults haven't we moved beyond childish wants, instant gratifications, knowing what we need, can afford, etc.? I guess not. I don't understand, but then I've never understood someone being afraid to look at their accounts because they feared blowing them up. Isn't self-discipline one measurement of becoming an adult? Life is (and will always be) full of temptations of many types.

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Re: Use credit card at stores instead of debit?

Post by anon_investor »

Toons wrote: Sun Jul 25, 2021 6:07 pm Cashback
Walmart
Amazon
For Us.....But

I might use a debit card to assist in
next car purchase
:mrgreen:
Will they let you pay for the whole car with a debit card? For my last car the dealer let me put $5k on my rewards CC and pay the rest via certified check. I would have loved to get all the pts by charging the entire cost...
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Re: Use credit card at stores instead of debit?

Post by Kruser64 »

"Bitcoin solves this" (/ducks)
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