Millennials: do you prefer debit to credit? if so, why?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Ivygirl
Posts: 1212
Joined: Sun Apr 06, 2014 1:36 pm

Re: Millennials: do you prefer debit to credit? if so, why?

Post by Ivygirl »

beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
patrick wrote: Mon Mar 27, 2023 5:35 pm
Ivygirl wrote: Mon Mar 27, 2023 2:53 pmI'll go even farther: I feel that both the "cash back" and the "rewards" insult my intelligence. So-called free money is pernicious both personally and also to society. If money is a store of value it is not free, unless maybe from Grandma in a birthday card. A reward is what one gets for performing a meritorious act, which spending is not, so the wrong word has been deliberately chosen to describe it.

That's two lies. Lying is not nice. Payment by plastic card is fine and often useful but the "cash back" "rewards" cards I will pass on.
How is "cash back" a lie? You can get cash as a result of using the card, at the rate advertised. I could think of some details one might quibble about (minimum redemption amounts, necessity to take easy steps to receive the cash, original payment not in cash, ability to get it back before the bill is paid) but omitting such minor things hardly seems like lying to me.

As far as "rewards" I don't understand the term as being exclusively used for meritorious act, but rather as also applying to anything given to encourage an activity. Since it is clearly being used with the latter meaning for cards so I don't see any deception there either.

The credit cards companies do not usually call it "free money" but if someone else calls it that it clearly means money that is easy to obtain. That is, money you can get without having to do any real work or sell anything of value. Since it is easy to use the credit card for purchases one would have made anyway, that seems to fit.
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
patrick
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Location: Mega-City One

Re: Millennials: do you prefer debit to credit? if so, why?

Post by patrick »

Ivygirl wrote: Mon Mar 27, 2023 5:47 pm Should anyone be getting money without having to do any real work or sell anything of value?
Yes. If a bank chooses to offer "free money" I think it is fine to accept it.
Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?
I think the bank should be allowed to make the offer to everyone, and everyone should be allowed to accept it. In practice there are some standards of creditworthiness applied (for obvious reasons) but they are often rather lax.
Did you answer that Just Me? Then you see the issue of justice there.
That would seem unfair, but that's not what the banks are doing.
If you answered Everyone, then money no longer has value and is in serious trouble.
The amount of "free money" that one can obtain easily is not infinite. If you get 2% back from your purchases, you still must pay the other 98% from somewhere else. Using category specific credit cards, credit card account opening bonuses, deposit account opening bonuses, and brokerage transfer bonuses can get you more, but you cannot readily live off the "free money" exclusively.
Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
As noted above, the "free money" is offered rather broadly, including to "regular" people, but is usually not enough to be the sole income source. It directly comes from the banks, who of course receive money in turn from merchants and cardholders who pay interest, all of whom opted to use credit cards in one way or another.
cmr79
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by cmr79 »

Another geriatric millennial, though I can't say I really identify with the generation in many ways. We use credit cards for basically everything. If w behave larger bills with multiple payment options, like local taxes, we pay whatever is cheapest after cash back, fees, etc. We have never carried a CC balance but enjoy the convenience.

Those unwilling to do extra work for a lower price (it isn't really free money if it require any effort at all) deserve to pay more. We accept that ourselves...we use one cash back card with no revolving categories because we're unwilling to track categories or churn cards to eek out a better rate. So some people paying cash or using debit cards are "suckers" subsidizing us, but we are also "suckers" subsidizing those on this site who put more effort in to churn different cards!
beezlebub
Posts: 206
Joined: Tue Feb 21, 2023 10:23 am

Re: Millennials: do you prefer debit to credit? if so, why?

Post by beezlebub »

Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
patrick wrote: Mon Mar 27, 2023 5:35 pm
Ivygirl wrote: Mon Mar 27, 2023 2:53 pmI'll go even farther: I feel that both the "cash back" and the "rewards" insult my intelligence. So-called free money is pernicious both personally and also to society. If money is a store of value it is not free, unless maybe from Grandma in a birthday card. A reward is what one gets for performing a meritorious act, which spending is not, so the wrong word has been deliberately chosen to describe it.

That's two lies. Lying is not nice. Payment by plastic card is fine and often useful but the "cash back" "rewards" cards I will pass on.
How is "cash back" a lie? You can get cash as a result of using the card, at the rate advertised. I could think of some details one might quibble about (minimum redemption amounts, necessity to take easy steps to receive the cash, original payment not in cash, ability to get it back before the bill is paid) but omitting such minor things hardly seems like lying to me.

As far as "rewards" I don't understand the term as being exclusively used for meritorious act, but rather as also applying to anything given to encourage an activity. Since it is clearly being used with the latter meaning for cards so I don't see any deception there either.

The credit cards companies do not usually call it "free money" but if someone else calls it that it clearly means money that is easy to obtain. That is, money you can get without having to do any real work or sell anything of value. Since it is easy to use the credit card for purchases one would have made anyway, that seems to fit.
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The user collecting cash back is generating business for the credit card company through merchant fees, and generating business at the stores they shop at -- that is an exchange that benefits all parties involved.
patrick
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Location: Mega-City One

Re: Millennials: do you prefer debit to credit? if so, why?

Post by patrick »

Ivygirl wrote: Mon Mar 27, 2023 6:26 pm I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The merchant receives the value of being able to transact with cards, which includes the ability to sell to some people who wouldn't pay with cash. If the merchant didn't consider this worth it, they could stop accepting cards. The credit card users paying interest gains the value of being able to buy things they can't afford now, and if they didn't consider that worth it, they could refrain from making the purchases.

What do you think about debit card rewards? How about rewards for opening new checking or savings accounts?
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AnnetteLouisan
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by AnnetteLouisan »

Yes, these are promotion incentives, like sales, discounts, samples and specials. Just very creative ones.
Last edited by AnnetteLouisan on Mon Mar 27, 2023 6:48 pm, edited 1 time in total.
Ivygirl
Posts: 1212
Joined: Sun Apr 06, 2014 1:36 pm

Re: Millennials: do you prefer debit to credit? if so, why?

Post by Ivygirl »

beezlebub wrote: Mon Mar 27, 2023 6:39 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
patrick wrote: Mon Mar 27, 2023 5:35 pm

How is "cash back" a lie? You can get cash as a result of using the card, at the rate advertised. I could think of some details one might quibble about (minimum redemption amounts, necessity to take easy steps to receive the cash, original payment not in cash, ability to get it back before the bill is paid) but omitting such minor things hardly seems like lying to me.

As far as "rewards" I don't understand the term as being exclusively used for meritorious act, but rather as also applying to anything given to encourage an activity. Since it is clearly being used with the latter meaning for cards so I don't see any deception there either.

The credit cards companies do not usually call it "free money" but if someone else calls it that it clearly means money that is easy to obtain. That is, money you can get without having to do any real work or sell anything of value. Since it is easy to use the credit card for purchases one would have made anyway, that seems to fit.
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The user collecting cash back is generating business for the credit card company through merchant fees, and generating business at the stores they shop at -- that is an exchange that benefits all parties involved.
I thought you were using the credit card for purchases you were going to make anyway. In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
stoptothink
Posts: 15368
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by stoptothink »

AnnetteLouisan wrote: Mon Mar 27, 2023 5:53 pm
nps wrote: Mon Mar 27, 2023 5:33 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:41 am Debit (with a credit feature) rewards me for not spending. I can’t afford to pay 18 percent more than the purchase price.

Also I’ve had no need for credit once I started working and paid off my student loans. So other than student loans I’ve probably paid less than $1,000 in interest in my entire life. I try to collect it, not pay it. That makes my life much easier.
I hope you are aware that you don't pay any credit card interest if you pay your bill in full each month
Yes I am aware of that. Thank you.

What percentage of global cardholders pay it off in full every month?

Not to jump into the fray here, but I think part of what IvyGirl is saying here resonates a bit with me. Specifically I get her feeling of vulnerability and hurt pride. I think there’s a bit of an injury to self in having been near poor that maybe expresses itself this way.

I don’t want to be in debt again. I was fooled before and I don’t want to be fooled again. It took a long time for me to get out of debt. I’m proud of not being in debt.


It’s like why would I buy cigarettes if I don’t want to smoke? Well, it’s ok if I only smoke one cigarette a week. Sure, but who does that? It’s a habit. I’ll just have one bite of cake and leave the rest. Sure… it’s just easier not to start.

I like to array my incentives such a way that I in am not being prodded to spend, whether by a card company or my own eagerness to get “rewards.” With all the marketing directed at all of us, and the urges to consume, and with all the studies and statistics on the trouble people get into using credit, why would I try to play that game? The card companies know us better than we often know ourselves.
:confused I grew up real poor, not "near poor". I guess those experiences have different effects because living in actual poverty made me more willing to taking advantage of anything any financial institution was willing to give me for little or no effort, "fair" or not. I have no control over others not being willing to educate themselves or exhibit the self-control necessary to play the game, not be a "victim" of the game - I don't worry about things I have no control over.
Ivygirl
Posts: 1212
Joined: Sun Apr 06, 2014 1:36 pm

Re: Millennials: do you prefer debit to credit? if so, why?

Post by Ivygirl »

patrick wrote: Mon Mar 27, 2023 6:45 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The merchant receives the value of being able to transact with cards, which includes the ability to sell to some people who wouldn't pay with cash. If the merchant didn't consider this worth it, they could stop accepting cards. The credit card users paying interest gains the value of being able to buy things they can't afford now, and if they didn't consider that worth it, they could refrain from making the purchases.

What do you think about debit card rewards? How about rewards for opening new checking or savings accounts?
You have well stated IMO the case for payment by plastic card, and also the (more problematic) case for payment by plastic credit card. But you haven't made the case that cash back is beneficial or necessary to get the benefits you listed. What is the reason a merchant or balance-carrying cc user would want to subsidize cash back, so the relationship is beneficial? I can't think of one.
smitcat
Posts: 13304
Joined: Mon Nov 07, 2016 9:51 am

Re: Millennials: do you prefer debit to credit? if so, why?

Post by smitcat »

Ivygirl wrote: Mon Mar 27, 2023 6:47 pm
beezlebub wrote: Mon Mar 27, 2023 6:39 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The user collecting cash back is generating business for the credit card company through merchant fees, and generating business at the stores they shop at -- that is an exchange that benefits all parties involved.
I thought you were using the credit card for purchases you were going to make anyway. In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
"I thought you were using the credit card for purchases you were going to make anyway. In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales."
In your case you paid for the same items without a credit card electing to not get the lower price.
That is of course your choice to make.

"It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken."
You can choose to shop for things or not - that is a free choice as well Getting the best price is not necessary for anyone.
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: Millennials: do you prefer debit to credit? if so, why?

Post by KlangFool »

Folks,

1) I come from multi generations business family. We use credit/loan/debt aka other people's money to run our business. Credit/debt is just a tool to us. We use it whenever it makes sense and profitable to us.

2) Some merchant offered 5% to 10% discount if I paid by cash. In those cases, I paid cash.

3) If someone did not face starvation and hunger, the person was not poor enough.

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smitcat
Posts: 13304
Joined: Mon Nov 07, 2016 9:51 am

Re: Millennials: do you prefer debit to credit? if so, why?

Post by smitcat »

Ivygirl wrote: Mon Mar 27, 2023 7:20 pm
patrick wrote: Mon Mar 27, 2023 6:45 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The merchant receives the value of being able to transact with cards, which includes the ability to sell to some people who wouldn't pay with cash. If the merchant didn't consider this worth it, they could stop accepting cards. The credit card users paying interest gains the value of being able to buy things they can't afford now, and if they didn't consider that worth it, they could refrain from making the purchases.

What do you think about debit card rewards? How about rewards for opening new checking or savings accounts?
You have well stated IMO the case for payment by plastic card, and also the (more problematic) case for payment by plastic credit card. But you haven't made the case that cash back is beneficial or necessary to get the benefits you listed. What is the reason a merchant or balance-carrying cc user would want to subsidize cash back, so the relationship is beneficial? I can't think of one.
"What is the reason a merchant or balance-carrying cc user would want to subsidize cash back, so the relationship is beneficial? I can't think of one."
It is a discount.
As said before some of our past vendors gave discounts for cash and some for CC.
You can choose to take a discount of not as long as you can pay with their preferred method.
FWIW - in most cases it was more work to pay with cash then CC.
masteraleph
Posts: 821
Joined: Wed Nov 04, 2009 8:45 am

Re: Millennials: do you prefer debit to credit? if so, why?

Post by masteraleph »

Elder millennial here-

Credit exclusively. At one point I was very into the rewards game, but as that's gotten somewhat harder than it was 15 years ago and as my attention has shifted I haven't been doing that so much.

I teach Gen-Z kids in high school, at least for now (within the next decade they'll be whatever comes after Gen-Z). I see a lot of Apple Pay and credit usage, but it's also an affluent group, so that might be different for kids of other classes. Many use Apple/Samsung Pay exclusively- there are several restaurants across the street that kids are allowed to go to and several, while still well frequented, are clearly not getting as much business as they could because many of the kids don't carry physical cards and two of the restaurants don't have POSs that accept tapping. I'm also curious how long Home Depot and a few other places that still don't accept NFC payment are going to hold out.

I have found a few places here and there that are cash or Venmo type places- but I, and most of the students I teach, have Venmo at least for peer-to-peer stuff.
Ivygirl
Posts: 1212
Joined: Sun Apr 06, 2014 1:36 pm

Re: Millennials: do you prefer debit to credit? if so, why?

Post by Ivygirl »

stoptothink wrote: Mon Mar 27, 2023 6:58 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:53 pm
nps wrote: Mon Mar 27, 2023 5:33 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:41 am Debit (with a credit feature) rewards me for not spending. I can’t afford to pay 18 percent more than the purchase price.

Also I’ve had no need for credit once I started working and paid off my student loans. So other than student loans I’ve probably paid less than $1,000 in interest in my entire life. I try to collect it, not pay it. That makes my life much easier.
I hope you are aware that you don't pay any credit card interest if you pay your bill in full each month
Yes I am aware of that. Thank you.

What percentage of global cardholders pay it off in full every month?

Not to jump into the fray here, but I think part of what IvyGirl is saying here resonates a bit with me. Specifically I get her feeling of vulnerability and hurt pride. I think there’s a bit of an injury to self in having been near poor that maybe expresses itself this way.

I don’t want to be in debt again. I was fooled before and I don’t want to be fooled again. It took a long time for me to get out of debt. I’m proud of not being in debt.


It’s like why would I buy cigarettes if I don’t want to smoke? Well, it’s ok if I only smoke one cigarette a week. Sure, but who does that? It’s a habit. I’ll just have one bite of cake and leave the rest. Sure… it’s just easier not to start.

I like to array my incentives such a way that I in am not being prodded to spend, whether by a card company or my own eagerness to get “rewards.” With all the marketing directed at all of us, and the urges to consume, and with all the studies and statistics on the trouble people get into using credit, why would I try to play that game? The card companies know us better than we often know ourselves.
:confused I grew up real poor, not "near poor". I guess those experiences have different effects because living in actual poverty made me more willing to taking advantage of anything any financial institution was willing to give me for little or no effort, "fair" or not. I have no control over others not being willing to educate themselves or exhibit the self-control necessary to play the game, not be a "victim" of the game - I don't worry about things I have no control over.
I'll point out that, when you were living in actual poverty, you would not have been able to benefit from cash back or credit card rewards, because you were too poor. Poor people do not benefit from these schemes, they pay them. That is past you and me, paying. Someone who dined large at Ruth's Chris "earned" cash back that past you and me would have paid.

If you personally have never paid credit card interest, then okay, fair point, it was just past me.
smitcat
Posts: 13304
Joined: Mon Nov 07, 2016 9:51 am

Re: Millennials: do you prefer debit to credit? if so, why?

Post by smitcat »

Ivygirl wrote: Mon Mar 27, 2023 7:20 pm
patrick wrote: Mon Mar 27, 2023 6:45 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The merchant receives the value of being able to transact with cards, which includes the ability to sell to some people who wouldn't pay with cash. If the merchant didn't consider this worth it, they could stop accepting cards. The credit card users paying interest gains the value of being able to buy things they can't afford now, and if they didn't consider that worth it, they could refrain from making the purchases.

What do you think about debit card rewards? How about rewards for opening new checking or savings accounts?
You have well stated IMO the case for payment by plastic card, and also the (more problematic) case for payment by plastic credit card. But you haven't made the case that cash back is beneficial or necessary to get the benefits you listed. What is the reason a merchant or balance-carrying cc user would want to subsidize cash back, so the relationship is beneficial? I can't think of one.
"You have well stated IMO the case for payment by plastic card, and also the (more problematic) case for payment by plastic credit card"
Some of our past vendors had discounts for CC and some had discounts for cash.
If you have the capability to pay with either you can choose which method to pay and take a discount or not.
smitcat
Posts: 13304
Joined: Mon Nov 07, 2016 9:51 am

Re: Millennials: do you prefer debit to credit? if so, why?

Post by smitcat »

Ivygirl wrote: Mon Mar 27, 2023 7:32 pm
stoptothink wrote: Mon Mar 27, 2023 6:58 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:53 pm
nps wrote: Mon Mar 27, 2023 5:33 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:41 am Debit (with a credit feature) rewards me for not spending. I can’t afford to pay 18 percent more than the purchase price.

Also I’ve had no need for credit once I started working and paid off my student loans. So other than student loans I’ve probably paid less than $1,000 in interest in my entire life. I try to collect it, not pay it. That makes my life much easier.
I hope you are aware that you don't pay any credit card interest if you pay your bill in full each month
Yes I am aware of that. Thank you.

What percentage of global cardholders pay it off in full every month?

Not to jump into the fray here, but I think part of what IvyGirl is saying here resonates a bit with me. Specifically I get her feeling of vulnerability and hurt pride. I think there’s a bit of an injury to self in having been near poor that maybe expresses itself this way.

I don’t want to be in debt again. I was fooled before and I don’t want to be fooled again. It took a long time for me to get out of debt. I’m proud of not being in debt.


It’s like why would I buy cigarettes if I don’t want to smoke? Well, it’s ok if I only smoke one cigarette a week. Sure, but who does that? It’s a habit. I’ll just have one bite of cake and leave the rest. Sure… it’s just easier not to start.

I like to array my incentives such a way that I in am not being prodded to spend, whether by a card company or my own eagerness to get “rewards.” With all the marketing directed at all of us, and the urges to consume, and with all the studies and statistics on the trouble people get into using credit, why would I try to play that game? The card companies know us better than we often know ourselves.
:confused I grew up real poor, not "near poor". I guess those experiences have different effects because living in actual poverty made me more willing to taking advantage of anything any financial institution was willing to give me for little or no effort, "fair" or not. I have no control over others not being willing to educate themselves or exhibit the self-control necessary to play the game, not be a "victim" of the game - I don't worry about things I have no control over.
I'll point out that, when you were living in actual poverty, you would not have been able to benefit from cash back or credit card rewards, because you were too poor. Poor people do not benefit from these schemes, they pay them. That is past you and me, paying. Someone who dined large at Ruth's Chris "earned" cash back that past you and me would have paid.

If you personally have never paid credit card interest, then okay, fair point, it was just past me.
"I'll point out that, when you were living in actual poverty, you would not have been able to benefit from cash back or credit card rewards, because you were too poor."
Not in my case.

"If you personally have never paid credit card interest, then okay, fair point, it was just past me."
I did make many mistakes along the way - but I also learned along the way.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by KlangFool »

Ivygirl wrote: Mon Mar 27, 2023 7:32 pm
I'll point out that, when you were living in actual poverty, you would not have been able to benefit from cash back or credit card rewards, because you were too poor. Poor people do not benefit from these schemes, they pay them. That is past you and me, paying. Someone who dined large at Ruth's Chris "earned" cash back that past you and me would have paid.

If you personally have never paid credit card interest, then okay, fair point, it was just past me.
Ivygirl,

Do you considered folks that faced hunger and starved regularly as in actual poverty or not?

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Re: Millennials: do you prefer debit to credit? if so, why?

Post by Ivygirl »

KlangFool wrote: Mon Mar 27, 2023 7:37 pm
Ivygirl wrote: Mon Mar 27, 2023 7:32 pm
I'll point out that, when you were living in actual poverty, you would not have been able to benefit from cash back or credit card rewards, because you were too poor. Poor people do not benefit from these schemes, they pay them. That is past you and me, paying. Someone who dined large at Ruth's Chris "earned" cash back that past you and me would have paid.

If you personally have never paid credit card interest, then okay, fair point, it was just past me.
Ivygirl,

Do you considered folks that faced hunger and starved regularly as in actual poverty or not?

KlangFool
Yes of course people who are hungry and starving are in actual poverty. There is no question.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by JakeyLee »

runswithscissors wrote: Mon Mar 27, 2023 3:15 am Debit cards are better for those that may not have the best self control with their spending.
Or tend to buy things with money they don't currently have. As this classic SNL clip highlights -

https://youtu.be/R3ZJKN_5M44

But it's also true that all else being equal, those with credit cards spend more money than those with debit cards. Cash back rewards, miles and other credit card perks all reinforce more spending. I wonder how much less money I'd spend if I bought everything with cash (i.e. debit)...
Yeah.. so the opposite? I mean, referencing your “self control “ concept. Truth be told, I swore off credit cards 20 years ago. But after being hacked for the third time in the last 10 years, I’m now a proud owner of a diamond platinum gold sapphire credit card. So now when I drive across west Texas, if I can’t tap my debit card, I pull out the credit card. Yay ?? 🙁
“On balance, the financial system subtracts value from society” | -John Bogle
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by 3000 »

When I was younger and didn't have credit I used by debit card. I only had one fraudulent charge put on my card, I got my money back and a new card. I now use credit cards for everything and my debit cards are only for ATM withdrawals. If I were to use a debit card to make a purchase I'd run it through Apple Pay. I'm not worried about losing money, it is more the headache of waiting to get my money returned.

This is guarantee from Schwab about their debit card:
You don't pay for any unauthorized charges or withdrawals. With the Schwab Security Guarantee, Schwab Bank will cover 100% of any losses in any of your Schwab Bank accounts due to unauthorized activity. Please monitor your monthly statement for fraudulent charges and immediately contact a Schwab Bank Representative at 888-403-9000 if you notice unauthorized activity. Full details on the Schwab Security Guarantee can be found here.
Link to the Schwab Security Guarantee: https://www.schwab.com/schwabsafe/security-guarantee
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by muffins14 »

Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
patrick wrote: Mon Mar 27, 2023 5:35 pm
Ivygirl wrote: Mon Mar 27, 2023 2:53 pmI'll go even farther: I feel that both the "cash back" and the "rewards" insult my intelligence. So-called free money is pernicious both personally and also to society. If money is a store of value it is not free, unless maybe from Grandma in a birthday card. A reward is what one gets for performing a meritorious act, which spending is not, so the wrong word has been deliberately chosen to describe it.

That's two lies. Lying is not nice. Payment by plastic card is fine and often useful but the "cash back" "rewards" cards I will pass on.
How is "cash back" a lie? You can get cash as a result of using the card, at the rate advertised. I could think of some details one might quibble about (minimum redemption amounts, necessity to take easy steps to receive the cash, original payment not in cash, ability to get it back before the bill is paid) but omitting such minor things hardly seems like lying to me.

As far as "rewards" I don't understand the term as being exclusively used for meritorious act, but rather as also applying to anything given to encourage an activity. Since it is clearly being used with the latter meaning for cards so I don't see any deception there either.

The credit cards companies do not usually call it "free money" but if someone else calls it that it clearly means money that is easy to obtain. That is, money you can get without having to do any real work or sell anything of value. Since it is easy to use the credit card for purchases one would have made anyway, that seems to fit.
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
Each time your CC is swiped, the CC issuer usually gets like 1-4% of the transaction value from the merchant. It’s a tax on their business to allow CC, but it’s convenient for shoppers so they do it.

That fee is part of what affords the CC issuer the ability to offer you a 1-2% cash back rewards program. It’s not really “free”, it’s just free to you, because the money comes from the business you are buying from. Does that mean that businesses raise prices to somewhat offset that fee, and sometimes people paying in cash are thus paying inflated prices while not receiving “free” CC rewards, yeah. And those people are likely those who are under banked or have bad credit and can’t get a CC. So, at some societal level yes, there is inequality there.

I don’t really understand your “money isn’t real” line of reasoning. I think the easiest way to think of all this is:
A) credit card companies make massive revenue from debt and from transaction fees. The latter presents a cost to businesses that strains their margins or must be fully passed to customers.
B) if you avoid CC or cannot get a CC, you are paying 2% more than your peers who can get a CC for most things at most places
C) thus it is good to build credit and avoid being in the “overpaying” group
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by muffins14 »

Ivygirl wrote: Mon Mar 27, 2023 6:47 pm
beezlebub wrote: Mon Mar 27, 2023 6:39 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The user collecting cash back is generating business for the credit card company through merchant fees, and generating business at the stores they shop at -- that is an exchange that benefits all parties involved.
I thought you were using the credit card for purchases you were going to make anyway. In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
I think a point is that if I have to buy paper towels, and I can choose store A that accepts CC and store B which does not, I can choose store A and save 2% via rewards. Store A wins the business by offering to accept CC. Store B loses that sale
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by rob »

StevieG72 wrote: Mon Mar 27, 2023 8:47 am
rob wrote: Sun Mar 26, 2023 9:07 pm My bank things I have three heads because I insisted they remove the debit facility and give me an ATM only card... Apparently not common. The protection is better on credit card... but even if it were not then your just arguing to get your own money back and dealing with the time gap to resolution instead of a future bill.
I go a step further and ask for credit only. No debit or ATM.
I'm with ya... but I like to have an ATM card as a couple of places I go often are cash bar sort of stuff, so like to be able to get cash at an ATM and with no visa/mastercard on the ATM card - they would have to guess a 6 digit PIN or make me take $ out physically at an ATM, I guess - not a remote crime like fraud.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by beezlebub »

Ivygirl wrote: Mon Mar 27, 2023 6:47 pm
beezlebub wrote: Mon Mar 27, 2023 6:39 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm
Ivygirl wrote: Mon Mar 27, 2023 5:47 pm
Should anyone be getting money without having to do any real work or sell anything of value?

Did you answer that Yes? If you did, should everyone get money without having to do any real work or sell anything of value, or just you?

Did you answer that Just Me? Then you see the issue of justice there.

If you answered Everyone, then money no longer has value and is in serious trouble.

Is it only regular people who have to do real work or sell something of value to get money? Where does the free money come from?
I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The user collecting cash back is generating business for the credit card company through merchant fees, and generating business at the stores they shop at -- that is an exchange that benefits all parties involved.
I thought you were using the credit card for purchases you were going to make anyway. In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
I don’t, but I can’t speak for others. I’m sure some of the millions of cash back card users carry a balance and buy more than would otherwise with, and to those people I have just one thing to say: thank you. The thousands I’ve collected in cash rewards over the years for no change to my spending behaviors, and no interest paid, are partly owed to those who over spend and carry balances and I am perfectly fine with that.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by patrick »

Ivygirl wrote: Mon Mar 27, 2023 7:20 pm
patrick wrote: Mon Mar 27, 2023 6:45 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The merchant receives the value of being able to transact with cards, which includes the ability to sell to some people who wouldn't pay with cash. If the merchant didn't consider this worth it, they could stop accepting cards. The credit card users paying interest gains the value of being able to buy things they can't afford now, and if they didn't consider that worth it, they could refrain from making the purchases.

What do you think about debit card rewards? How about rewards for opening new checking or savings accounts?
You have well stated IMO the case for payment by plastic card, and also the (more problematic) case for payment by plastic credit card. But you haven't made the case that cash back is beneficial or necessary to get the benefits you listed. What is the reason a merchant or balance-carrying cc user would want to subsidize cash back, so the relationship is beneficial? I can't think of one.
The balance-carrying credit card user would surely be better off with a hypothetical alternative scenario of no credit card rewards and lower interest rates. The merchant's case is less clear cut. If only one merchant selectively refused cash back cards, that merchant would surely lose some business to competitors, but if cash back cards didn't exist at all, merchants might be better off.

Nonetheless, with the current scenario of credits being offered as a package deal, both groups have opted in to them. Apparently they consider the overall benefits of using or accepting credit cards worth the overall cost. The overall relationship can be beneficial even if not every specific detail of it is beneficial.

Of course it is possible that some or all of those involved are mistaken. Perhaps the balance-carrying credit card user would do better not making the purchases at all. And perhaps the merchant would be better off taking only cash (or maybe checks too?) if the fees to accept credit cards eat so far into the margins that it isn't worth any increase in sales.

It sounds like you think the banks ought to offer a different package deal to everyone. While some people would be better off in that scenario, others would be worse off. As things stand now, everyone is allowed to opt out of cards if they so choose.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by MtnTravel »

Interesting discussion. I’ll add a couple counter points.

First, a lot of people who shun debit cards for “security reasons” also churn credit cards and have multiple open accounts with different issuers. The more accounts you have, the greater your chances of fraud occurring (unless you don’t use the card). I think it has been pretty well established that debit card and credit card protections are nearly identical, save for the fact that it may be a bit more of a hassle if fraud occurs on a debit card

Second, unless you are a SERIOUS churner, are the rewards that good? For instance, if you’re spending 100k a year on a personal credit card, and paying it off, presumably you have a high-ish income. Even with a 2% cash back card, you’re getting an 2k a year in cash back. Sure, that’s basically free money, but it’s not like it’ll move the needle at all in your overall personal finances. And points cards seem useless after the sign up bonus. Has anyone actually seen how many miles/points a round trip ticket in international business costs? I have no desire to spend hours trying to find a “deal” using points and miles.

Personally, I have seen a lot of higher income/wealthy people using debit cards, and just as many using credit cards. People I work with, friends, relatives. I think a lot of people like the simplicity and not having another account to track and another bill to pay. It’s nice to see, in real time, how much cash you have without doing mental accounting of what is owed on what card, and what the pending charges are. I think it’s an entirely unfair generalization to say that the only people who do (or should) use debit cards are people who can’t get credit or aren’t responsible spenders.

In Europe, credit cards are very rare, and nearly everyone pays with debit (or equivalent).
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by mega317 »

Ivygirl wrote: Mon Mar 27, 2023 4:00 pm I accept your addend. Free money is only desirable when it is free to oneself but expensive to someone else. If it were free for everybody, well where is the reward in that. One would want it to cost oneself nothing to obtain, but still be worth something when time to spend. You see the problem there, right? Money is a game marker for some people, and a store of value for others.
You completely lost me at this point. Do you think people who take advantage of credit card cash back and points are playing a game at the expense of--who, exactly?--and have no consideration for the value of money?
"Words mean things" and "Language is arbitrary" cannot both be true.
Of course they can and are. Maybe you missed the literal example. See also: Shakespeare in re: roses. There are exceptions but calling whatever the credit card companies are doing "cash back rewards" is not one of those exceptions. It's quite a thing to refer to other definitions of those words and be offended.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by mega317 »

MtnTravel wrote: Mon Mar 27, 2023 9:08 pm Second, unless you are a SERIOUS churner, are the rewards that good? For instance, if you’re spending 100k a year on a personal credit card, and paying it off, presumably you have a high-ish income. Even with a 2% cash back card, you’re getting an 2k a year in cash back.
Well, if your expenses don't change in retirement that's an extra week of spending every year for doing literally nothing. No new cards, no churning, no needing to unfreeze credit, no MS games. Over a 30 year career that's over 7 months less one would have to work.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by MtnTravel »

mega317 wrote: Mon Mar 27, 2023 9:27 pm
MtnTravel wrote: Mon Mar 27, 2023 9:08 pm Second, unless you are a SERIOUS churner, are the rewards that good? For instance, if you’re spending 100k a year on a personal credit card, and paying it off, presumably you have a high-ish income. Even with a 2% cash back card, you’re getting an 2k a year in cash back.
Well, if your expenses don't change in retirement that's an extra week of spending every year for doing literally nothing. No new cards, no churning, no needing to unfreeze credit, no MS games. Over a 30 year career that's over 7 months less one would have to work.
I do agree, I was just making a counter point. (And I have a cash back card :D )

I think there’s lots of ways people could save extra money here and there, but some people value the simplicity of a debit card and a single “account” for most purchases. And there’s no promise these rewards will be around forever. There’s been a lot of pushing to cap interchange fees, and if that happens, rewards will basically be gone. I think that’s a large part of why Europeans don’t really use credit cards. The rewards aren’t there and the banks have to charge annual fees just to break even.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by patrick »

MtnTravel wrote: Mon Mar 27, 2023 9:08 pm Interesting discussion. I’ll add a couple counter points.

First, a lot of people who shun debit cards for “security reasons” also churn credit cards and have multiple open accounts with different issuers. The more accounts you have, the greater your chances of fraud occurring (unless you don’t use the card). I think it has been pretty well established that debit card and credit card protections are nearly identical, save for the fact that it may be a bit more of a hassle if fraud occurs on a debit card

Second, unless you are a SERIOUS churner, are the rewards that good? For instance, if you’re spending 100k a year on a personal credit card, and paying it off, presumably you have a high-ish income. Even with a 2% cash back card, you’re getting an 2k a year in cash back. Sure, that’s basically free money, but it’s not like it’ll move the needle at all in your overall personal finances. And points cards seem useless after the sign up bonus. Has anyone actually seen how many miles/points a round trip ticket in international business costs? I have no desire to spend hours trying to find a “deal” using points and miles.

Personally, I have seen a lot of higher income/wealthy people using debit cards, and just as many using credit cards. People I work with, friends, relatives. I think a lot of people like the simplicity and not having another account to track and another bill to pay. It’s nice to see, in real time, how much cash you have without doing mental accounting of what is owed on what card, and what the pending charges are. I think it’s an entirely unfair generalization to say that the only people who do (or should) use debit cards are people who can’t get credit or aren’t responsible spenders.

In Europe, credit cards are very rare, and nearly everyone pays with debit (or equivalent).
Debit card fraud could go well beyond "a bit more of a hassle" if it drains the account you use for important bills like housing payments. Of course you could mitigate this by using a different account for important bills than daily spending, but then you have to deal with multiple accounts!

2% cash back should be seen as the bare minimum, since it's what you can get with one single card and no requirements. Even if you wanted to keep only one card, you could get 2.5% from Alliant Credit Union (though you have to use their low interest checking account) or 2.625% from Bank of America (though you have to keep $100,000 in assets there, brokerage assets count). With a few category-specific cards you could likely get 3% or 4% on average with ongoing spending, though it depends on spending patterns. Have you seen how much cash a round trip ticket in international business costs?

According to https://www.forbes.com/advisor/credit-c ... tatistics/ higher income households are more likely to have credit cards.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by AnnetteLouisan »

I think it depends on your view of debt as a droll little game or an existential threat. For most it’s somewhere between those two, but we won’t know until the game is over.

What I mean by that is some will make $ on their card, some will overspend, some will take unnecessary flights for mileage points, some will be cautious at first but gradually lose track of it, and some will suffer declining credit scores when they lose their jobs and can’t keep up or when dementia strikes.

It plays out over time, so we don’t really know how it will end for us. It’s a process.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by MtnTravel »

patrick wrote: Mon Mar 27, 2023 9:47 pm
Debit card fraud could go well beyond "a bit more of a hassle" if it drains the account you use for important bills like housing payments. Of course you could mitigate this by using a different account for important bills than daily spending, but then you have to deal with multiple accounts!

2% cash back should be seen as the bare minimum, since it's what you can get with one single card and no requirements. Even if you wanted to keep only one card, you could get 2.5% from Alliant Credit Union (though you have to use their low interest checking account) or 2.625% from Bank of America (though you have to keep $100,000 in assets there, brokerage assets count). With a few category-specific cards you could likely get 3% or 4% on average with ongoing spending, though it depends on spending patterns. Have you seen how much cash a round trip ticket in international business costs?

According to https://www.forbes.com/advisor/credit-c ... tatistics/ higher income households are more likely to have credit cards.
I think the fraud aspects are incredibly overblown. I only use my debit card when I can use Apple Pay. I also get a text any time there's a transaction on my debit card. Fraudulent charge? I can go into the app and lock the card or call the bank. I also don't have my checking linked to any savings account for overdraft, so there's always cash to pay bills until I can get the fraud sorted out.

I am also not disputing that 2% is nice. Free money is always nice. But I also value simplicity... a lot. I don't want to carry around a Costanza wallet full of cards and have to decide which one to swipe every time I buy something or eat out. I also don't like having to do a bunch of mental accounting to figure out how much free cash I have on hand by logging into a bunch of credit cards and adding up pending charges.

All my post above was meant to do is offer some counter points. Dave Ramsey skews towards rabid debit card users, while this forum skews towards rabid credit card users. There's a lot of value for both, and one is not necessarily better than another.

Personally? I like and use my cash back card. I use my card any time I have to give my card to a server at a restaurant, any time apply pay isn't accepted, for travel, and for online purchases. But sometimes it's really easy to just use a debit card on Apple Pay and the money goes right out of your account.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by anon_investor »

AnnetteLouisan wrote: Mon Mar 27, 2023 9:56 pm I think it depends on your view of debt as a droll little game or an existential threat. For most it’s somewhere between those two, but we won’t know until the game is over.

What I mean by that is some will make $ on their card, some will overspend, some will take unnecessary flights for mileage points, some will be cautious at first but gradually lose track of it, and some will suffer declining credit scores when they lose their jobs and can’t keep up or when dementia strikes.

It plays out over time, so we don’t really know how it will end for us. It’s a process.
If you can't control yourself a credit card can be dangerous. However, if you can, it can be beneficial. We charge everything but our mortgage and only buy what we need, snagging 2.625% to 5.25% cash back along the way. We will pay a 5 figure tax bill soon with a credit card and earn 2.625% cash back, the fee is 1.85% cash back, so like getting a 0.775% discount on our taxes. We have the money to pay (earning over 4.2%), so we won't end up paying any credit card interest.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by JackoC »

MtnTravel wrote: Mon Mar 27, 2023 9:08 pm Interesting discussion. I’ll add a couple counter points.

1. First, a lot of people who shun debit cards for “security reasons” also churn credit cards and have multiple open accounts with different issuers. The more accounts you have, the greater your chances of fraud occurring (unless you don’t use the card). I think it has been pretty well established that debit card and credit card protections are nearly identical, save for the fact that it may be a bit more of a hassle if fraud occurs on a debit card

2. Second, unless you are a SERIOUS churner, are the rewards that good? For instance, if you’re spending 100k a year on a personal credit card, and paying it off, presumably you have a high-ish income. Even with a 2% cash back card, you’re getting an 2k a year in cash back. Sure, that’s basically free money, but it’s not like it’ll move the needle at all in your overall personal finances. And points cards seem useless after the sign up bonus. Has anyone actually seen how many miles/points a round trip ticket in international business costs? I have no desire to spend hours trying to find a “deal” using points and miles.

3. Personally, I have seen a lot of higher income/wealthy people using debit cards, and just as many using credit cards. People I work with, friends, relatives. I think a lot of people like the simplicity and not having another account to track and another bill to pay. It’s nice to see, in real time, how much cash you have without doing mental accounting of what is owed on what card, and what the pending charges are. I think it’s an entirely unfair generalization to say that the only people who do (or should) use debit cards are people who can’t get credit or aren’t responsible spenders.

4. In Europe, credit cards are very rare, and nearly everyone pays with debit (or equivalent).
1. I guess, but fact still is a hack of your debit card is a nasty shock (back account empty, happened to one of my kids), hacked credit card is really nothing, you call them, tell them and never pay. It's only a hassle if it happens on a CC you use for lots of autopays, then have to change them all. I use the same CC for all autopays and don't use it for anything else, except eg. the govt for estimated tax, no stores or online shopping. I agree though isn't a huge deal, to me, but some people are more sensitive to those kind of events than others.

2. Cash back is the reason I use CC's. It doesn't 'move the needle' more than a few % for anybody. But I'd just rather have that money than not. I don't see much reason to leave it on the table. I don't think having a debit card is a huge hassle, but I think you actually have to pay more attention in that case to make sure there's enough money in the checking account, with CC just wait for the bill (or statement closing date to come near if you pay them off even before closing date). And with savings/MMF rates now well above 4%, the float on delaying payment and not having as much in checking till just before you need it is not entirely negligible either. Churning for opening bonuses is a different thing. People who really specialize in that claim to make $k's per year without a huge spending base. But that's actual work. I do it sometimes, not a great deal.

3. Again my 'millennial' kids use debit cards, which I basically never do, and I'm not calling them names. But it's just a reality that the *individual financial* reason not to use CC's is they do tend to make you spend more, usually, most people, and sometimes disastrously. That's less important for a person of a certain nature, or any given nature once they are established in good financial habits, and/or simply have more money (we don't need to spend less than we do).

4. Not rare. Some European countries have significantly lower use of CC's than US but others are similar to US, not actually rare anywhere in the rich world now. Highest % of people owning at least one CC is Canada. Anyway this point suggests I think the possible confusion in the long running debate resurrected on this thread about 'social harmfulness' of CC cashback. That is not an *individual financial* consideration. One could have *public policy* opinions about this, since different regulatory policies can make CC cashback less attractive as a marketing tool. But, it doesn't make any pure $ individual sense to refuse a discount because other people don't take it, or even aren't in a position to. That would be the same as refusing to use supermarket coupons, shop for sales, shop at the supermarket at all rather than the higher priced corner convenience store (other customers might have trouble getting to the supermarket), try to negotiate car prices, almost innumerable examples. And it's beyond scope here to debate public policy, and confusing when people try to make what are basically public policy arguments dressed up as consumer choice issues.

That said, obviously any individual is free not to use CC's, or coupons, etc for any reason they feel like. For CC cashback, 'it's 2%, who cares?' is fine if you don't care. I care, relative to the tiny extra work if any IMO v using a DC. And our cards pay 2.625%~6% not 2%.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by dodecahedron »

Bikesy wrote: Mon Mar 27, 2023 6:03 am in all honesty when I finally took a good look at our budgeting and spending I decided that personally, having a large chunk of money in my checking account that was technically already spent made me feel more flush than I actually was and that was subconsciously making me feel like I could spend more.
How about paying off your credit card purchases promptly after each purchase? It would be nice if this could be automated, but maybe if you just sat down each night and reviewed the day's spending and paid down the balance on your card to zero each night?
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by Doctor Rhythm »

It was important for us to get our post-Millenial / Gen-Z child set up with a credit card. The main reason was to avoid the unnecessary risks of using a debit card (but I won’t disagree with those who say the risk is small). Building credit is also a secondary goal.

Beyond the fraud risk, I also like having a major bank act a firewall between me and the merchant.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by AnnetteLouisan »

muffins14 wrote: Mon Mar 27, 2023 8:29 pm
Ivygirl wrote: Mon Mar 27, 2023 6:47 pm
beezlebub wrote: Mon Mar 27, 2023 6:39 pm
Ivygirl wrote: Mon Mar 27, 2023 6:26 pm
beezlebub wrote: Mon Mar 27, 2023 5:54 pm

I don't think anyone here is arguing that cash back is "free." We all can acknowledge those that carry balances along with merchant fees pay for the cash rewards we receive. If you collect cash back or not, there are still going to be some users that carry balances and pay interests, and merchants will still may fees. That is life and the nature of economic activity.
I learned in school that economic activity was exchange of value. Capital, labor, innovation, natural resources, something. What value did the receiver of CC "rewards" give back to the merchants and the cc users carrying balances and paying interest?

Nothing, right? Something there isn't healthy.

It's really poor capitalism too. The whole point of capitalism is that money has a cost. It is literally the debit versus credit issue. Debit you pay from value you already have using money which is a store of that value; credit you pay from future value you hope to have plus the cost of money. Money should cost something, or something is broken.
The user collecting cash back is generating business for the credit card company through merchant fees, and generating business at the stores they shop at -- that is an exchange that benefits all parties involved.
I thought you were using the credit card for purchases you were going to make anyway. In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
I think a point is that if I have to buy paper towels, and I can choose store A that accepts CC and store B which does not, I can choose store A and save 2% via rewards. Store A wins the business by offering to accept CC. Store B loses that sale
Well said. Card usage shifts many consumers’ focus from price, quality and trustworthiness of the store in your example, to whether you can get cash back.

In other contexts, a card helps consumers get over the decisional pain point that card companies call “friction” - their hesitancy to go from wanting to spending. In times past, people asked themselves if they could afford and if they really needed a purchase. Today we say, “I’ll just put it on my card and get cash back.” It’s thoroughly studied and well understood in the industry that rewards programs lead to higher levels of ”engagement” with the card - ie, more spending.

Much like buying individual stocks, where people used to focus on stock price, price to earnings, future prospects, quality of management, viability of the business and now focus on asset allocation.

I actually am all for expanded access to credit like we enjoy today. Freedom is also the freedom to make mistakes. Bogleheads are by and large aware enough not to get caught in a credit card debt spiral. Many credit card customers globally are not.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by conservativeinvestor »

I think you're in the wrong place to ask this question, financially savvy people are going to understand the benefits of paying with credit cards. The people who struggle with finances are almost always pushed to stay away from credit and use cash or debit only to keep themselves out of credit card debt troubles. Dave Ramsey pushes cash and debit only because he sees people who get buried in credit card debt and can't get out.

I also see a lot of "boomers" on non financial forums "brag" that they use cash or debit only so they can remind everyone that they have been completely debt free since 1982.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by OrangeKiwi »

Ivygirl wrote: Mon Mar 27, 2023 6:47 pm In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
If this were true, then businesses would offer a discount for debit card or cash purchases. Small businesses do not see sufficient increase in sales from having the same credit card and debit/cash price, so small business frequently do offer a debit/cash discount.

Big businesses see a net gain from people choosing to use credit cards via customers being more willing to pay higher prices, hence big businesses prefer not to offer an explicit cash/debit discount. One sort of notable exception here is Target, which does offer 5% off for letting them deduct via ACH from your account (via Debit Redcard), but that is still not quite the same as a cash/debit card discount.
muffins14 wrote: Mon Mar 27, 2023 8:29 pm

I think a point is that if I have to buy paper towels, and I can choose store A that accepts CC and store B which does not, I can choose store A and save 2% via rewards. Store A wins the business by offering to accept CC. Store B loses that sale
Store B is free to offer lower prices because they do not have the expense of accepting credit cards. Winco is a big retail/grocery company in the west that advertises this.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by AnnetteLouisan »

conservativeinvestor wrote: Tue Mar 28, 2023 4:58 am I think you're in the wrong place to ask this question, financially savvy people are going to understand the benefits of paying with credit cards. The people who struggle with finances are almost always pushed to stay away from credit and use cash or debit only to keep themselves out of credit card debt troubles. Dave Ramsey pushes cash and debit only because he sees people who get buried in credit card debt and can't get out.

I also see a lot of "boomers" on non financial forums "brag" that they use cash or debit only so they can remind everyone that they have been completely debt free since 1982.
I think there are a number of issues getting a little tangled up here:

1. Do Millennials prefer using bank debit cards *with a credit feature* and using them as credit cards in lieu of traditional branded credit cards? And if so, why?

2. Do Millennials prefer using bank debit card’s debit feature?

3. Are cash back and other credit card rewards programs helpful discounts or harmful spending incentives and should we care?
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by stoptothink »

Ivygirl wrote: Mon Mar 27, 2023 7:32 pm
stoptothink wrote: Mon Mar 27, 2023 6:58 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:53 pm
nps wrote: Mon Mar 27, 2023 5:33 pm
AnnetteLouisan wrote: Mon Mar 27, 2023 5:41 am Debit (with a credit feature) rewards me for not spending. I can’t afford to pay 18 percent more than the purchase price.

Also I’ve had no need for credit once I started working and paid off my student loans. So other than student loans I’ve probably paid less than $1,000 in interest in my entire life. I try to collect it, not pay it. That makes my life much easier.
I hope you are aware that you don't pay any credit card interest if you pay your bill in full each month
Yes I am aware of that. Thank you.

What percentage of global cardholders pay it off in full every month?

Not to jump into the fray here, but I think part of what IvyGirl is saying here resonates a bit with me. Specifically I get her feeling of vulnerability and hurt pride. I think there’s a bit of an injury to self in having been near poor that maybe expresses itself this way.

I don’t want to be in debt again. I was fooled before and I don’t want to be fooled again. It took a long time for me to get out of debt. I’m proud of not being in debt.


It’s like why would I buy cigarettes if I don’t want to smoke? Well, it’s ok if I only smoke one cigarette a week. Sure, but who does that? It’s a habit. I’ll just have one bite of cake and leave the rest. Sure… it’s just easier not to start.

I like to array my incentives such a way that I in am not being prodded to spend, whether by a card company or my own eagerness to get “rewards.” With all the marketing directed at all of us, and the urges to consume, and with all the studies and statistics on the trouble people get into using credit, why would I try to play that game? The card companies know us better than we often know ourselves.
:confused I grew up real poor, not "near poor". I guess those experiences have different effects because living in actual poverty made me more willing to taking advantage of anything any financial institution was willing to give me for little or no effort, "fair" or not. I have no control over others not being willing to educate themselves or exhibit the self-control necessary to play the game, not be a "victim" of the game - I don't worry about things I have no control over.
I'll point out that, when you were living in actual poverty, you would not have been able to benefit from cash back or credit card rewards, because you were too poor. Poor people do not benefit from these schemes, they pay them. That is past you and me, paying. Someone who dined large at Ruth's Chris "earned" cash back that past you and me would have paid.

If you personally have never paid credit card interest, then okay, fair point, it was just past me.
I got my first CC as a sophomore in college, just about the second I turned 18. I did not have a penny to my name (and that was more than my mom had); playing football and working (often two jobs) to pay for my education completely on my own. My first card was a "cash back" card. Of course many (if not most) 18yr olds get a card and immediately get in trouble buying things they can' afford and that is why credit cards as so widely available to them, but that is their fault alone. There is nothing stopping someone with little or no assets from using a cash back rewards card to pay for necessities and then paying off the balance every month other than ignorance or their inability to fend off instant gratification.

In 23 years of heavy CC usage, I have paid a grand total of $.00 in credit card interest. It's pretty simple if you don't buy things you can't afford. If a "poor" individual has money in their account to cover debit charges, why wouldn't they have money in their account to cover credit card charges for necessities?
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by YeahBuddy »

This millennial used to prefer debit to credit to get the checking account rewards but no longer. I prefer Apple Pay (linked to my 1.5% cb cc) and 2 other rewards CCs.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by dcabler »

I generally only use my debit card in 2 instances
- For those rare times when I've depleted my very small cash reserve held in my wallet
- There is a large liquor store chain here in TX that gives 5% off when using debit cards.


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Re: Millennials: do you prefer debit to credit? if so, why?

Post by homebuyer6426 »

Older end of millenial here.

I use credit cards for online purchases and always pay it off monthly.

I prefer to use cash for in-person transactions. I like that it's harder to track and control.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by hudson »

dcabler wrote: Tue Mar 28, 2023 6:52 am I generally only use my debit card in 2 instances
- For those rare times when I've depleted my very small cash reserve held in my wallet
- There is a large liquor store chain here in TX that gives 5% off when using debit cards.


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Re: Millennials: do you prefer debit to credit? if so, why?

Post by pindevil »

Credit always and frequent churning for the bonuses. Use the points mainly for air travel. I have a family of four and we travel by air approximately six times a year (excluding peak pandemic). I haven't paid for an airline ticket out of pocket since 2015.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by deltaneutral83 »

MtnTravel wrote: Mon Mar 27, 2023 9:08 pm Interesting discussion. I’ll add a couple counter points.

First, a lot of people who shun debit cards for “security reasons” also churn credit cards and have multiple open accounts with different issuers. The more accounts you have, the greater your chances of fraud occurring (unless you don’t use the card). I think it has been pretty well established that debit card and credit card protections are nearly identical, save for the fact that it may be a bit more of a hassle if fraud occurs on a debit card

Second, unless you are a SERIOUS churner, are the rewards that good? For instance, if you’re spending 100k a year on a personal credit card, and paying it off, presumably you have a high-ish income. Even with a 2% cash back card, you’re getting an 2k a year in cash back. Sure, that’s basically free money, but it’s not like it’ll move the needle at all in your overall personal finances. And points cards seem useless after the sign up bonus. Has anyone actually seen how many miles/points a round trip ticket in international business costs? I have no desire to spend hours trying to find a “deal” using points and miles.

Personally, I have seen a lot of higher income/wealthy people using debit cards, and just as many using credit cards. People I work with, friends, relatives. I think a lot of people like the simplicity and not having another account to track and another bill to pay. It’s nice to see, in real time, how much cash you have without doing mental accounting of what is owed on what card, and what the pending charges are. I think it’s an entirely unfair generalization to say that the only people who do (or should) use debit cards are people who can’t get credit or aren’t responsible spenders.

In Europe, credit cards are very rare, and nearly everyone pays with debit (or equivalent).
Everyone is entitled to their opinion but literally everything else in this post that is stated as fact is inaccurate. It would take an hour to go through it line by line but the most comical part was:
I think it has been pretty well established that debit card and credit card protections are nearly identical, save for the fact that it may be a bit more of a hassle if fraud occurs on a debit card
So they're "nearly identical" except that they are different in an extraordinary way. Once you've had $13k tied up at your local bank because some fraudster drained your checking account, and it took 5 weeks and hours worth of phone calls to get it back, you won't gloss over this "little" difference in credit/debit.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by Hoosier CPA »

I think the reason part of the reason that debit cards don't offer cash back/rewards is because unlike in the credit card system there aren't people other paying interest to the debit card companies that is then used to fund those cash back/rewards programs. I know the transaction fees are lower also. It's unsettling to make money off the credit card system but I'm not yet to the point of not doing it...yet.
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by muffins14 »

Hoosier CPA wrote: Tue Mar 28, 2023 8:38 am I think the reason part of the reason that debit cards don't offer cash back/rewards is because unlike in the credit card system there aren't people other paying interest to the debit card companies that is then used to fund those cash back/rewards programs. I know the transaction fees are lower also. It's unsettling to make money off the credit card system but I'm not yet to the point of not doing it...yet.
I think someone can use debit and trigger overdraft fees that way, which could be much higher in % terms than credit card interest. So one must also never opt in to debit overdraft, or check their balance to ensure they don’t exceed their available cash.

Those paying debit overdraft fees are then subsiding your banking experience, just like someone who is swiping a credit card instead
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Re: Millennials: do you prefer debit to credit? if so, why?

Post by JackoC »

OrangeKiwi wrote: Tue Mar 28, 2023 5:27 am
Ivygirl wrote: Mon Mar 27, 2023 6:47 pm In that case no benefit to the merchant, he or she is just paying you for nothing, there was no increase in sales.

Surely you are not spending more than you normally would, then, because of the "rewards"? :wink: Surely not.
1. If this were true, then businesses would offer a discount for debit card or cash purchases. Small businesses do not see sufficient increase in sales from having the same credit card and debit/cash price, so small business frequently do offer a debit/cash discount.

2. Big businesses see a net gain from people choosing to use credit cards via customers being more willing to pay higher prices, hence big businesses prefer not to offer an explicit cash/debit discount. One sort of notable exception here is Target, which does offer 5% off for letting them deduct via ACH from your account (via Debit Redcard), but that is still not quite the same as a cash/debit card discount.
muffins14 wrote: Mon Mar 27, 2023 8:29 pm I think a point is that if I have to buy paper towels, and I can choose store A that accepts CC and store B which does not, I can choose store A and save 2% via rewards. Store A wins the business by offering to accept CC. Store B loses that sale
Store B is free to offer lower prices because they do not have the expense of accepting credit cards. Winco is a big retail/grocery company in the west that advertises this.
1. Or put a surcharge on CC purchases, though merchants are allowed to do that only in some states. Giving discount for cash has been explicitly nationally legal since 2010, though states can limit the %.

2. I agree and it's obvious most businesses, large and small, do not see it as in their interest to charge different prices based on method of payment. I would just again suggest, since some people are obviously confused by this (not saying you), carefully thinking about the distinction of your personal strictly financial interest and different hats you might wear as citizen/voter, 'altruist' etc. Also that you can only compare prices that actually exist. You can't for example, compare the net price you pay at big store including CC cashback to the same store charging the same price as now to CC users but giving everybody who uses DC or cash a discount: they wouldn't do that, I wouldn't do that either if my paid duty was to represent the shareholders of big store, which is the position of corporate managers all empty rhetoric aside. The real comparison is what I pay at big store using CC minus the CB v net price I'd pay (whether a one price for all methods or DC discount or CC surcharge) at mom and pop. Big store is lower in general. I might shop at M&P for other reasons. I might have socio-political views about what 'we' should do about any and all cases of perceived 'unfairness', but I shouldn't confuse myself and say 'I pay more at big store because of CC'. Not compared to any real alternative in the market. Or, if there is such an alternative that's lower for me for whatever reason (lower tag price, bigger discount for the payment I use) I may well switch stores.
Last edited by JackoC on Tue Mar 28, 2023 9:49 am, edited 1 time in total.
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