Seriously thoughtful Debit Cards vs Credit Cards

[tirsales]

Continued from here

Originally Posted by TheLongshot

But when something goes wrong (i.e. your card gets stolen) it is easier to deal with a credit card than it is with debit cards, especially if the guy overdraws your bank account and now you have to argue fees with the bank. Also, a credit card company is more likely to warn you if they see unusual activity.

Originally Posted by Xenophon

I have a VISA debit-card too. But mostly I use my credit cards instead. The reason is twofold. First, the legal protections for credit card users are much more robust than for debit cards. There's no fundamental reason why it should be so; it's the current state of the law. I have much greater protection against fraud, theft, bad products, etc. when I use my credit card than with the debit card! Second, while the debit card allows easy access to my bank accounts, it doesn't provide side benefits (like cash-back on all purchases). A typical credit card gives at least 1% back -- and I'm happy to take the money!

These are very good reasons to choose a credit card in this system - but not a reason for starting this system.
What I meant is: What is the benefit of a credit based system vs a deposit based system? I personally do much prefer to spend only money I *own* then taking a credit (however shortlived it may be).

Not to mention there are usually more benefits that you can get with credit cards. I don't see too many debit cards that give you cash back or bonuses of some sort. As long as you pay it back every month, it can be a good deal.

This is different in Germany

In either case, it's only sensible to pay off the entire bill at the end of the month. Credit card interest rates are amazingly high; don't get caught behind that particular 8-ball unless you can't possibly avoid it! Taking a "loan" from your credit card company is nearly always a bad choice.

I agree.

[Xenophon]

Well, in the US at least, the credit card business got started as a way for traveling business-men to charge their expenses to a single card without having to shell out their own expense money up front. They would then submit the expense to their employer for reimbursement and (usually) get the money before the credit card bill arrived. I note that the early cards were actually charge cards -- they required payment in full at the end of the month! The charge card companies made their money by charging a fee to the merchants. Who, in turn, made out by attracting additional business -- relatively free-spending business, at that -- in the form of the traveling businessmen who were spending OPM (Other People's Money).

The "credit" part of credit cards arrived later, when banks and large retailers decided to get in on the game. Why, you may ask, would a charge card holder want a credit card instead? They probably wouldn't. But because the early charge-card companies were very selective about who could get cards, there were lots of folks who didn't qualify. The banks and large retailers were less selective, by comparison, because they expected to make money charging ridiculous interest rates if you didn't pay in full. In fact, they hoped their customers wouldn't pay in full at the end of the month!

I finally got a Visa card to go with my American Express charge card only when too many merchants switched to Visa/MC rather than taking Amex -- I had to have the other card or pay cash. And I rarely carry much cash.

Xenophon

[Angst]

I will not use a debit card.

If I lose my debit card, all money charged to my card will be removed directly from my bank account. While I am not responsible for those charges, and the bank will eventually refund my money, in the mean time, all payments made from that account, will result in a NSF (non-sufficient funds) transaction. This means utility payments, rent, mortgage and any other payments will fail until the bank returns the stolen money to my account. I always insist on receiving an ATM card NOT a debit card.

Not that credit cards are much better. I once had a credit card I canceled. One month after I canceled the card, 13 subscriptions to AOL were charged to my card on the same day. When I called the credit card company to complain about charges made after I had canceled my card, I was told certain charges could still be added to my account after I closed it. After much weeping and gnashing of teeth and temper tantrums, six months later they finally dropped the charges.

If you owe the bank one hundred dollars and can't pay, it's your problem.
If you owe the bank one hundred million dollars and can't pay, it's the bank's problem.

[tirsales]

Originally Posted by Angst

If I lose my debit card, all money charged to my card will be removed directly from my bank account.

Where is the difference between "lossing money from a bank account" and "having to pay said money to the credit card company"?

[Sweetpea]

Originally Posted by Xenophon

Well, in the US at least, the credit card business got started as a way for traveling business-men to charge their expenses to a single card without having to shell out their own expense money up front. They would then submit the expense to their employer for reimbursement and (usually) get the money before the credit card bill arrived. I note that the early cards were actually charge cards -- they required payment in full at the end of the month! The charge card companies made their money by charging a fee to the merchants. Who, in turn, made out by attracting additional business -- relatively free-spending business, at that -- in the form of the traveling businessmen who were spending OPM (Other People's Money).

This is still a reason why most companies give a creditcard to their employees to pay for traveling expenses. You can pay for it, declare it at your employer and by the time the money gets removed from your bankaccount, you already have the money from your boss.

I have a creditcard (for ages) and if I pay for it, it will get debitted from my bank account at the end of the month, always. It is still a good way to spread your spending. We paid our latest holiday (skiing!) during two months. Part of the things we paid directly by our debit card, other parts by credit card (mostly the big one-time spender things, like ski rental and lift tickets).

I'd say a debit card is safer than a credit card. If I lose my credit card, the finder (who doesn't have my PIN) can still use it until I block the card. He only needs to go to the internet, order a lot with it and I still lose the money. If I lose my debit card, the finder (who again doesn't have my PIN) can't do anything with it. He can't get money from an ATM (as he needs the PIN), he can't use it on the internet (as he again needs the PIN).

[JSWolf]

Where my wife works, they have a company credit card that they give to people going on business trips. That way, they get a full run down of all the expenses and they pay it. Nothing comes out of pocket for the employees.

[pilotbob]

Originally Posted by tirsales

Where is the difference between "lossing money from a bank account" and "having to pay said money to the credit card company"?

All credit cards have fraud protection. You have zero $ liability. Also, if your credit card # is used without your knowledge money isn't coming out our your checking account.

Granted, I think debit cards are protected from fraud too. However, that money comes out our your checking account right away. So, other checks or charges could bounce.

Granted, this won't happen to me. I have overdraft protection on my checking account tied to my credit card account. But, not everyone has that.

So, yes there is a difference. I also prefer the credit card route due to the cash back, extra warranty and other advantages. It is just paid off automatically from my checking account each month anyway. So, pretty much the same as a debit card, yet there is 1 month debit.

BOb

[wodin]

Originally Posted by pilotbob

All credit cards have fraud protection. You have zero $ liability. Also, if your credit card # is used without your knowledge money isn't coming out our your checking account.

Granted, I think debit cards are protected from fraud too. However, that money comes out our your checking account right away. So, other checks or charges could bounce.

Granted, this won't happen to me. I have overdraft protection on my checking account tied to my credit card account. But, not everyone has that.

So, yes there is a difference. I also prefer the credit card route due to the cash back, extra warranty and other advantages. It is just paid off automatically from my checking account each month anyway. So, pretty much the same as a debit card, yet there is 1 month debit.

BOb

My debit card is also a credit card, I can use it either way. If I specify credit, I sign the receipt, and if I specify debit I enter my PIN.

When I use it as a credit card, my online balance shows X dollars in my account with x minus the credit card purchase available, and if I drill down on that it shows the purchase pending. In other words it doesn't come out of my account right away, it usually takes a day or two.

So here's the question(s):

If I use it in credit mode, do I get all the same guarantees as any other credit card? If so, why would I ever want to use it in debit mode?

[HarryT]

Originally Posted by wodin

If I use it in credit mode, do I get all the same guarantees as any other credit card? If so, why would I ever want to use it in debit mode?

In the UK you can get cash at pretty much any store using a debit card. Can you not do the same in the US? That's one reason. Saves having to find an ATM.

[wodin]

Originally Posted by HarryT

In the UK you can get cash at pretty much any store using a debit card. Can you not do the same in the US? That's one reason. Saves having to find an ATM.

You can get cash back when you make a purchase using a debit card.

Personally I find that a rather useless feature as ATMs are nearly as ubiquitous as retail stores.

[Sweetpea]

Originally Posted by wodin

You can get cash back when you make a purchase using a debit card.

Personally I find that a rather useless feature as ATMs are nearly as ubiquitous as retail stores.

I don't want to use an ATM, neither do I want to have too much money in my wallet. I just use my debit card for about every payment I do (that includes everything from 1 euro and up).

And that cash back must be something US only, I've never heard of it anywhere here...

[tirsales]

Originally Posted by Sweetpea

And that cash back must be something US only, I've never heard of it anywhere here...

Actually I have seen a German shop on Friday sporting ads for this (new) "service".

[Stitchawl]

I can only use my credit cards ONCE. Then the bank puts a 'warm hold' on my account stating 'unusual activity' as the reason. I have to call the bank's fraud department, confirm that yes, I did actually charge a purchase of a hotel room in Thailand or a dinner in Singapore. No matter how many times I tell them that most of my charges will be made in S.E. Asia, (and they do have that marked in my files,) they still put the hold on the card. This is great from a security standpoint. No one can use my cards to rack up big bills. But it's a major pain for me! I have to have half a dozen cards in my wallet when ever I go anywhere. The only card issuer that doesn't do this to me is AMEX but I can't use that in many remote locations.

Stitchawl

[tirsales]

Fitting to this topic a (German) report by the newspaper Spiegel (or its online version): USA fürchten Kreditkarten-Crash (roughly: USA fearing credit card crash)

[wodin]

Originally Posted by Sweetpea

And that cash back must be something US only, I've never heard of it anywhere here...

Actually I don't know what other counties do, I was answering Harry's question about what happens in the US here:

Originally Posted by HarryT

In the UK you can get cash at pretty much any store using a debit card. Can you not do the same in the US? That's one reason. Saves having to find an ATM.