Way back in last August, I came across a story at CBS Marketwatch predicting the End of the World for Debit Cards. I’ve never used them, myself — to my mind the debit card simply has too many disadvantages. Not only do they present the potential for surprising little fees, but they make it way too easy to blunder into an overdraft. Plus anyone who steals the thing can drain your account to nil and, if you have overdraft “protection,” sink you into debt.
So it was with some interest that I noted my son has quit using his. He always used to pay everything with cash or a debit card, but recently he’s taken to charging everything on a credit card and then paying the balance in full at the end of the month. (The apple doesn’t fall far from the tree, does it? :-D)
Between that habit and the invariably on-time mortgage payments, he had such a staggeringly stellar credit rating that he easily wangled a 0% loan on the car he purchased a month or so ago.
Personally, I’ve started paying for more things with cash dollars — only because I would like not to be paying for this month’s purchases with next month’s income. The end-date for the AMEX billing cycle, which appears to be set in stone, falls on the 20th of the month. Thus it’s always out of synch with my monthly budget, which annoys me no end. So these days I charge purchases made between the first and the 20th and then use a small cash budget to cover expenses that occur in the last ten days of the calendar month.
Debit card? Yeah: I use it to extract said cash from an ATM. But I can’t even imagine using it to make purchases.
So how was Marketwatch’s prediction, from your point of view? Are you using your debit card less?
I’m with ya….that whole debit card “dynamic” makes no sense to me. On the other hand, paying as much as I can with a rewards credit card, paying the bill in full at the end of the month and reaping the “rewards” from the purchases makes perfect sense to me. Gotta tell ya those “gift cards” purchased with rewards dollars sure come in handy over the Holidays…..
Yah, cash is beginning to look like a mighty fine gift, now that my son can pretty much buy whatever he wants when he wants it.
Gotta be careful w/ gift cards, from what I’m told, that they don’t have some expiration date or some tricky thing like losing value as time passes.
Honestly I don’t think debit cards are ever going away. There will always be a population that doesn’t have the financial wherewithal to get a credit card but doesn’t want to carry around large sums of cash. Whether it’s the pre-paid debit cards, or ones associated with a savings or checking account, that population will continue to use debit cards.
Me? The only time I use mine is at Costco – because they take Amex, Discover, or debit only and I don’t have an Amex or a Discover card. I can’t use my Visa card there. It’s the only small flaw in an otherwise stellar company.
Well…check out the hefty kickback you get on that Costco AMEX card. If you can train yourself to pay it off at the end of each month, it’s definitely worth getting one.
Even without that, though, to my mind the credit card has the benefit that you can cancel fraudulent charges, whereas if someone steals your debit card and hacks into your account, they can drain every penny and leave you holding the bag.
I already pay off my card each month, but I won’t have an Amex for any reason. Bad experience with them back in the day, plus their fees are simply unreasonable.
As to whether or not you’re screwed if someone gets hold of your debit card, that depends on your bank. My debit card number got stolen a couple of years ago (don’t know where, like I said I hardly ever use it), and my bank, Navy Federal Credit Union, noticed usual activity, called me, locked it down, and refunded my money in 24 hours. If your bank won’t do that, then find a bank that will. They’re out there.
Excellent credit union!
Along these lines, did you see this article at CNN Money? http://money.cnn.com/2013/12/20/pf/expert/debit-credit-cards/
I completely concur.
Debit cards are in fact a hassle.
I prefer to use credit cards.
I can easily cancel the card if it gets stolen, and I will always have a spare one. I also get additional discounts when I go places with my credit card company.
5% cash back is amazing.
No doubt the merchants are getting zinged for this amount and passing the cost along to us…but it makes for a feel-good rebate once a year, anyway. 😀
Well, they’re handy, aren’t they? We use the grocery store as an ATM and do a mix of debit and cash. We don’t have “swipe” fees with our bank, but on the two occasions the numbers were used by evildoers (possibly part of the Elbonian mafia), the bank covered the charges. The (minor) hassle was in replacing the cards We have *one* credit card, and it sees the occasional use.
The CU supposedly gives you two free swipes a month. However, you have to use an ATM from a cooperating bank…and Wells Fargo, for example, ain’t one of those. If you try to withdraw some cash through a Wells Fargo ATM, W-F gouges you $3 for the privilege. That’s another good reason to use a credit card.
I have such a bad habit of just using my debit card – no withdrawing cash! It’s so useful to have cash around, too – you never know when you’re gonna need it. Time to follow your advice. Thanks for the article!
I think I can count on one hand the number of times in my entire 40+ years that I’ve used a debit card for a purchase. Partly I think it’s generational. When I first learned I could use the card my CU issued for the ATM for purchases it sounded good until I found out there were fees for doing so. I started using my Discover card for all purchases and reaping the cash rewards (while also paying the balance off), then added a Capital One Mastercard to my wallet for travel. (No fees on transactions outside the US, plus cash back on groceries and gas.) I will occasionally use cash when I have it, but I put everything on the cash back cards that I can.
I have friends that are younger than me who are used to using debit cards for many of their purchases. They say it helps them keep on budget better than a credit card. So I guess it works for some people.