Credit, Debit or None of the Above?

[youbet]

We've had some interesting discussions regarding the use of credit cards vs. debit cards vs. neither. Personally, I have 2 credit cards, zero debit cards and use cash for most small, incidental purchases. The credit cards are used on-line, at the gas station, grocery store and for most purchases over $20 or so.

What do you think of the advise in this article? How do you use your cards?

10-places-not-to-use-your-debit-card: Personal Finance News from Yahoo! Finance

 

[Rustward]

Have several credit cards and use them for as many purchases as possible. Until a couple of years ago I used cash for small purchases (<$15 or $20) but use credit cards for those now. Have one debit card and only use it go get cash from the ATM only at the credit union ATM, and infrequently. Used it once to pay property taxes but that was years ago. Write checks for property taxes, and those are just about the only checks I write. Edit to add: I also pay bills with the free online bill-pay through the credit union. One feature I like about bill-pay is the ability to schedule future payments.

If I understand correctly, a thief with your debit card information can completely empty the account it is linked to.

 

[Alan]

I use credit for just about everything. At the liquor store we use (Specs) they have a 10% discount for cash, so I use a debit card there.

I generally only use cash for purchases under $10.

For restaurants I wish they would be more like the UK and Europe where the server brings a hand-held to the table so your card never leaves your sight.

 

[clifp]

To me the only place to use a debit card is at an ATM machine,or when an establishment doesn't take credit cards AND you don't have a cash. I don't think they have any advantages over credit cards or cash.

 

[John Galt III]

Cash and checks for everything.

Exceptions to the rule : I use cc for my ISP, since they insist on it. Also, I use cc for emergencies. I use a debit card for ATM cash. ( no fee ).

I'm afraid of fraud involving my cc, therefore the minimal use.

Would like to see reality tv show about the catching of cc fraudsters and a public physical beating of them.

 

[Rustward]

I'm afraid of fraud involving my cc, therefore the minimal use.

Like millions of other people I have been a victim of credit card fraud. In my two cases the fraud was detected by the credit card company, and I was allowed to verbally (on the phone) deny I made the charges and they were removed. I believe if the cardholder initiates the exchange (of denying charges) the card company has you sign an affidavit and mail it in. No big deal.

 

[bbbamI]

Personally, I have 2 credit cards, zero debit cards and use cash for most small, incidental purchases. The credit cards are used on-line, at the gas station, grocery store and for most purchases over $20 or so.

Everything is the same for me, except I have 3 major credit cards.

 

[Onward]

The current Kiplinger mag has an in-depth article on credit vs debit cards. Might want to check it out.

 

[freebird5825]

Joint credit card with cashback rewards, medium size credit limit -everything we purchase locally with known, frequently used businesses and selected online vendors. Cash for unfamiliar vendors. We get approx $450 cashback per year.
My own credit card with very low credit limit - select online vendors and for out of town travel reservations, only with known companies. Cash only for all purchases with unfamiliar small businesses.
His credit card - his online purchases, very select few vendors.
Debit cards - never use them except for credit union ATM cash withdrawals.

 

[Rustward]

How Credit Card Numbers Are Stolen

OK, a little OT. This 2008 CNN article describes how > 40 million credit card numbers were stolen.
Justice: Hackers steal 40 million credit card numbers - CNN.com

"-- are accused of hacking into the wireless computer networks of retailers including TJX Companies, whose stores include Marshall's and T.J. Maxx, BJ's Wholesale Club, OfficeMax, Barnes and Noble and Sports Authority, among others.
The three men installed "sniffer" programs designed to capture credit card numbers, passwords and account information as they moved through the retailers' card processing networks, said Michael Sullivan, the U.S. attorney in Boston. "

So it doesn't really matter how careful you are. Those numbers go a lot of places that the average consumer doesn't even know exist. Certainly not advocating reckless behavior, though.

New PCI standards require encryption when a card number travels across open public networks, but it sounds like the guys in this article were inside private networks.

 

[Zathras]

Credit card for virtually everything.
Checks are too easy to copy/forge and I have NEVER had a bank stop a suspicious check where our credit card company has been very good about checking out suspicious charges.

 

[IndependentlyPoor]

I am under the impression that a one's liability as a victim of credit card fraud is limited by federal law, but that debit cards do not enjoy this protection. Does anyone know if this is true, or am I imagining things again?

 

[tinlizzy]

I am under the impression that a one's liability as a victim of credit card fraud is limited by federal law, but that debit cards do not enjoy this protection. Does anyone know if this is true, or am I imagining things again?

FTC answer

I use my debit as a credit because I have a high yield checking acct. Use CC for major/online purchases. Rarely have cash.

 

[Lakedog]

Use a credit card for essentially everything no matter how little the cost as long as they will take a credit card (Penfed Visa for the rewards). Doubt that I have written a half dozen checks or spent more than $100 cash in the last five years. I have only used a debit card for cash at an ATM.

 

[plex]

Debit cards are exponentially more risky than using a credit card, because as mentioned, you can get cleaned out if (and more likely when) your card number gets stolen.

If your credit card number is stolen (and not the card), the customer, by federal law, is not liable for any charges, as long as it is reported within a reasonable amount of time. There is a potential maximum $25 liability if the credit card is lost (and you admit it), not reported lost, and then used fraudulently.

 

[Walt34]

We don't have debit cards at all, and refuse them when offered. But we do use credit cards.

The distinction is that the consumer protections are so much better with a cc than debit card.

If somebody steals my cc, so what? I have to write a letter, perhaps fill out an affidavit of forgery, but I'm not out any money. With a debit card, I'm out the money until the bank's investigators, who may or may not be competent, decide on who takes the loss. With a cc you also have a lot more lead time to report the unauthorized use (60 days) than with a debit card (2 days) after learning of the unauthorized use.

Frankly, I'm puzzled why anyone would use a debit card when they have the option of using a credit card.

 

[donheff]

I have never used a debit card for anything other that an ATM. I used credit cards with airline miles for everything I possibly can. I carry minimal cash and pay my CC bills in full.

 

[Dawg52]

I use my PenFed CC on almost everything. Purchases less than $10 I pay cash. Don't have a debit card.

 

[smjsl]

Wherever possible, I use CC to get 2% discount on all such purchases. Cut up debit cards as soon as I get them since I never use them. I also never activate them. I get cash directly from the tellers on a rare occasion that I am in a branch.

 

[Moemg]

I use my debit card at ATM's ,food stores ,and the post office . I never use them at restaurants . I do have two credit cards . One is my main card that I use for most purchases . The second is a shared card that my SO and I use for travel,restaurants and household items .

 

[stoutboy]

credit card for all large purchases (paid off in full every month), mainly for frequent flyer miles. I think I have enough now so I can go business class for life! Cash as much as possible, particularly after I became a Where's George hobbyist.

 

[ERD50]

The distinction is that the consumer protections are so much better with a cc than debit card.

If somebody steals my cc, so what? I have to write a letter, perhaps fill out an affidavit of forgery, but I'm not out any money. With a debit card, I'm out the money until the bank's investigators, who may or may not be competent, decide on who takes the loss.

You have me thinking now. I was issued a debit card to use at the ATM. I rarely ever use it (by using my cc for almost everything, my cash lasts a long time), but I carry it with me in case I do need it. Hmmm, maybe I should leave it at home unless I think there might be a need?

-ERD50

 

[Goonie]

I use an Amazon Rewards VISA for almost everything....in person, online, over the phone, etc., whether it's large purchase or a small purchase or somewhere in between. It gets paid off monthly to avoid any interest charges. I'm banking the rewards points to pay for a new camera that I want.....won't be long now!!!

I keep very little cash on hand, which I use for tips at the coffee shop, eating lunch or getting ice cream at one of the little neighborhood joints that don't accept CC's, buying whatever the neighbor kids are selling for fundraisers, tickets and raffles for certain charitable events, and stuff like that.

I only write a few checks each year...one for license plate renewal (IL doesn't accept CC at their facilities...dumb@sses!), and then a few to at my buddy's hobby shop. I write so few checks, that when I do write one, I have to stand there for a minute and try to remember how to do it!

 

[happy2bretired]

I have both a credit card (only one that I've had for years) and one debit card. I transfer $600 every month from my checking account to my debit card (I call my debit card, my reloadable card). I use the debit card for all my little monthly expenses, including groceries, haircuts, and other monthly incidentals. I use my credit card for travel and large purchases that I pay off monthly.

 

[scrabbler1]

As I have written in other threads, I use my credit card about 5 or 6 times a year. These purchases are made online, are revolving purchases (i.e. annual fees for services), or for large purchases I won't make with cash (more than $50).

I use my debit card maybe once a year and that is as a safety net for when I unexpectedly did not have enough cash with me to make the purchase, or if I had another errand to make which only took cash so I needed to retain what I had with me at the time.

Most months, I don't receive a credit card bill, so if I don't need to use in a given month, I don't. The bank which issues my credit card is walking distance from where I live so it is not a big deal to pay it nonetheless. The nearest ATM is also walking distance from where I live (and I drive by there all the time anyway).

I buy so little "stuff" I have no interest in cash-back rebates. I see using the plastic as little as possible a safety measure against ID theft.