Debit, Credit or Cash

[Live And Learn]

I only use my debit card inside my bank at their ATMs. I've written about 5 paper checks over the past three years. I pay everything I can by credit card; items I can't use a credit card for get paid via bank draft (basically you enter the info onto the banks online bill pay system and the bank writes a check).

I NEVER allow a company to pull money from my accounts. I always push the transaction through my bill pay.

I check my credit card activity at least once a week and I have alerts for my savings accounts for all transactions more than $100.

I use a cash back card and have used those points to buy myself a tablet and a kindle. I have another $1000 due to me and when I finally see a discretionary thingy that I really want I'll use my points to get it.

 

[youbet]

we record each charge as it occurs in our check register and subtract it from our balance immediately

This really sounds like a huge hassle. Stopping and writing down each purchase as you charge it? Why do you do that? There must be something I'm missing.

We charge most purchases on credit cards. But, after some friends got burned, I asked DW to use cash when she makes small purchases at little trendy spots she and her girlfriends like to frequent. Boutiques, quilt shops, small eateries, etc. I feel there is a greater chance of fraud when the clerk or server walks away with your card in these places than when you use the card at a Target or other major retailer.

To those who don't use/have debit cards: totally agree. I've yet to be able to find any advantage to using a debit card over a credit card. The opposite actually.

 

[daylatedollarshort]

Boutiques, quilt shops, small eateries, etc.

don't forget Target!

 

[jollystomper]

I use mostly CC and cash. No debit cards due to the exposures other mentioned - I don't want anything tied directly to my accounts.

I download from my CC accounts every day into Quicken, so I always know the card balance and how it maps against our budget.... and that keeps me disciplined in using the CC.

I seemed to get "burned" every other year or so with fraudulent CC charges (interestingly only with cards I've used in restaurants, never with one I have used online or in a retail store). But (a) it doesn't cost me anything, and (b) I get the CC replaced in a few days (and have others to use if needed), so for me it is a minor hassle, but not a big deal.

 

[youbet]

and Target!

As I mentioned, situations like the one that occured at Target are certainly a concern. But I'm still more concerned about using a CC at small, independent shops and restaurants where a clerk or server has your card out of your sight than I would be about using the CC in a Target store today.

Admittedly, this is based on anecdotal evidence. We know several folks who had CC issues that stemmed from individuals using their CC data after obtaining it by simply jotting it down off their CC while they had the card out of sight of the owner. We don't know anyone who were actual victims of CC fraud from a data hijack from a major retailer like Target.

 

[Rustic23]

Two credit cards, two debit cards. Actually one of the debit cards has never been activated. One C card is for gas only, other gets just about all our purchases. It has about $1,800 in cash back credit now. Debit card is used to get cash from USAA.

 

[Midpack]

we record each charge as it occurs in our check register and subtract it from our balance immediately.

This really sounds like a huge hassle. Stopping and writing down each purchase as you charge it? Why do you do that? There must be something I'm missing.

I shouldn't have said immediately, DW throws all our receipts in her "wallet" and actually enters them once or twice a week, so they're only roughly in order. If I'm not with her, my charge receipts go in the mail pile on the kitchen table and she snaps them up daily. Online receipts I fwd to her, per her request.

It's a throwback to when we first married and 1) we used cash and checks more often than credit cards, and 2) we didn't want to be among the many we've known who didn't pay attention and then were repeatedly surprised at how much their monthly CC statement was, and couldn't pay the whole thing (paid partial and interest). We just never got out of the habit, and it's much easier to have every expense in one place (check register in our case) for tracking expenses/budget. I was simply stating our old fashioned approach, not making a recommendation.

She still reconciles our checking account statement every month to the penny. I've told her there's no need for decades, but you pick your battles...

 

[youbet]

It's a throwback ..... We just never got out of the habit.

I can definitely identify with that! We've got our list of old habits sticking to us too.......

 

[daylatedollarshort]

Walmart.com called my son today to ask about one of the charges to his debit card that cleared out his account last night. So the debit card company caught the charges right after they happened and walmart had their transaction flagged as suspicious.

The debit cards scare me because the money can get taken out of accounts right away. It is like letting thieves have direct access to your checking account and then you have to work to get the money restored. There are more consumer protections with credit cards.

 

[Nemo2]

I shouldn't have said immediately, DW throws all our receipts in her "wallet" and actually enters them once or twice a week, so they're only roughly in order.

We keep our current receipts in an envelope, and on the CC bill date I cut & paste all the transactions onto notepad and delete them one at a time against the corresponding receipts (which I save for a year or so) before paying the CC balance due.

 

[Rustic23]

I download the cc data to quicken two or three times a week, we'll at least once a week depending on how much shopping we have done. I check the validity of each charge then.

 

[sheehs1]

I have only had one credit card. No debit card. After discovering today I had 30,600 reward points and realizing how much more quickly they could add up if I used it for everything, I'm rethinking my ways. Was able to make a "cash back" credit payment against my card purchases for Christmas with those points of $290.00. If I had used the card for everything rather than just online and store purchases it would have been far more. I can see where it can relate to some significant dollars and benefits.
I asked them to up my credit limit and I applied for an "immediate cash back" card as a back up card for travel (since I didn't have a back up card).
Late to the game but better late than never. Now I just have to set up a system and become comfortable with it.

 

[audreyh1]

An easier way to deal with potential credit card fraud is to have a card you use only for recurring charges, and not even carry it in your wallet. That way if your "everyday" card is compromised, you don't have to scramble to update a bunch of automatic charges.

 

[rescueme]

I don't have and will never have a debit card.

If you use an ATM for your bank/CU, it will probably be a debit card.

 

[Cassie]

I'm not online with banking...or purchases other than a plane ticket. I also don't have a pay-pal account. I do move $$ from my bank account to my brokerage account. Help me get the other foot in the 21st century.... what are the pros cons of using cc or banking online? Thanks

 

[Mulligan]

I'm not online with banking...or purchases other than a plane ticket. I also don't have a pay-pal account. I do move $$ from my bank account to my brokerage account. Help me get the other foot in the 21st century.... what are the pros cons of using cc or banking online? Thanks

I muddle along in the middle of things... Some autopay, some monthly from CC, and about 5 checks a month. Every transaction I purchase is a rewards card except restaurants and they will never see my CC. Cable provider will always get a check because they know it's not direct pay and I use it over their head every year. If you were a frequent traveler in retirement it would be very convenient to set all your bills online, as you would never worry about overdue bills when returning or having someone pay them while you are gone.

 

[Cassie]

I muddle along in the middle of things... Some autopay, some monthly from CC, and about 5 checks a month. Every transaction I purchase is a rewards card except restaurants and they will never see my CC. Cable provider will always get a check because they know it's not direct pay and I use it over their head every year. If you were a frequent traveler in retirement it would be very convenient to set all your bills online, as you would never worry about overdue bills when returning or having someone pay them while you are gone.

Thanks, I have set up auto pay for mortgage, gas, electricity, phone, u-verse, alarm, & LTC. I too muddle in the middle...guess we're middle muddles.

 

[scrabbler1]

Thanks, I have set up auto pay for mortgage, gas, electricity, phone, u-verse, alarm, & LTC. I too muddle in the middle...guess we're middle muddles.

I am a middle muddler, too. I have ACH for monthly payments to entities I am unlikely to change or get rid of. Those include phone/internet, cable TV, and electric. For my monthly co-op maintenance I switched to auto-pay through my online banking (they mail a paper check) because they don't take ACH. I have to change the monthly amount every year and, for 2014, I had to change the mailing address for the check. The only thing I do not like so much about this method of payment is that I don't get to include any payment coupon (but my co-op's managing agent is fine with this). But otherwise that is on autopilot like the ACH payments.

For health insurance, I will pay by paper check because I have changed providers so many times over the years and don't want to set up something new and I want to include the payment coupon. I also worry about being double-billed by mistake.

For my credit card, I pay it on line through online banking because it is the same bank with my checking account. Just a few point-and-clicks to make the transfer.

All of my other bills are less frequent than monthly so I am fine with paying by paper check I mail out myself. And they all include some payment coupon and/or lots of info I write in the memo part. These include income taxes, auto insurance, homeowners insurance, and charities. With some of these, I have used a paper check from one of my mutual funds because it was for a large amount, too big for my regular checking account to handle.

Once in a while I have an in-person payment by check such as for my dentist.

Overall, it is good to have all of these choices so I can pick the best one for the bill I need to pay, giving me the best combination of convenience and security.

 

[bssc]

One thing we do for restaurants is that round up to the nearest dollar so when I check the statement, I get alerted if something is off. Off included bad math on my part and them forgetting to charge me for the tip.

 

[clifp]

I never use a debit card for the all reason outlined above. I'll pay cash for small transactions and for anyone willing to give me a cash discount. Other than that a rewards credit card, not only that but I have that using something like Mint. It really helps summarize my spending to use credit cards on most everything.

 

[cranberryjoe]

I use credit cards for everything and pay in full each month. I play the card shuffling game to maximize cash back rewards, although at some point I'm sure I'll get tired of the complexity and drop down to using one or two cards.

One benefit of paying everything with credit cards is expense tracking. It's easier to know how much I'm spending on groceries and restaurants and hobbies because it's all in the CC statements which I download into my financial tracking software (MoneyDance). I've tried tracking cash expenses and it just doesn't work for me. I'm in my first year of ER and I want to track expenses closely for the first few years to be sure my plan is working.

 

[HFWR]

Nearly all bills and purchases are paid by credit card, for either air miles or cash back. Paid in full each month. Use my debit card to get cash from the CU's ATM.

 

[youbet]

Why is it that people, especially on this forum, mention "paid in full each month" in regard to credit card usage. Given this audience, wouldn't it be the extreme exception for someone to regularly carry a balance?

I assume, on this forum, when I mention that I use my credit card for some categories of purchases, that everyone knows that means that items purchased during the month on the CC are paid for in full at the end of the billing month. That is, that I'm not carrying an ongoing CC balance.

Bad assumption? Should I be mentioning "paid in full each month" each and every time I mention "CC?"

 

[Mulligan]

Why is it that people, especially on this forum, mention "paid in full each month" in regard to credit card usage. Given this audience, wouldn't it be the extreme exception for someone to regularly carry a balance? I assume, on this forum, when I mention that I use my credit card for some categories of purchases, that everyone knows that means that items purchased during the month on the CC are paid for in full at the end of the billing month. That is, that I'm not carrying an ongoing CC balance. Bad assumption? Should I be mentioning "paid in full each month" each and every time I mention "CC?"

I think some posters are just emphasizing that they are not chasing credit card cash back money buy owing interest back on the purchases. Some of those cash back commercials are so over the top, they make it look like you earn a profit every times you successfully beat your friend to the punch to pay for lunch with your credit card.

 

[aja8888]

Why is it that people, especially on this forum, mention "paid in full each month" in regard to credit card usage. Given this audience, wouldn't it be the extreme exception for someone to regularly carry a balance?

I assume, on this forum, when I mention that I use my credit card for some categories of purchases, that everyone knows that means that items purchased during the month on the CC are paid for in full at the end of the billing month. That is, that I'm not carrying an ongoing CC balance.

Bad assumption? Should I be mentioning "paid in full each month" each and every time I mention "CC?"

Yes, it would be hard to believe that the frugal folks on this venue would be caught dead with a revolving balance on a CC. Rates are crazy high (25%+) and anyone that has to pay that rate is certainly not a candidate for FI, let alone ER or even R.

I suppose you can abbreviate "paid in full each month" by using PIFEM?

Example: "I use my CC (PIFEM) for all my purchases..."