Credit Vs Debit Cards

[kaciara]

http://www.kiplinger.com/tools/credit_or_debit/map.html

 

[jedc53]

Credit cards offer flexible spending options, allowing you to purchase items or receive cash advances on credit.A debit card has several of the advantages of a credit card in terms of convenience and reducing the use of cash and checks. Furthermore, you can use it as an ATM card as well, to withdraw cash from your account and carry out other ATM transactions.When you use a debit card, you can sometimes choose how the purchase is processed. It can either be an online transaction or an offline transaction.

 

[montmorencyt2w]

Credit cards are designed purely and simply to allow people to live beyond their means.
This is true, to some extent, even for those who pay off the balance in full every month.

In the UK at least, the introduction of the debit card came many years after the introduction of credit cards, and, I guess, were mainly introduced to overcome the limitations of cheques (which are now in the process of being phased out).

I wonder, if the debit card had predated the credit card, would credit cards have taken off in the big way that they did, with the corresponding spiralling of personal debt?
I am sure they were the number one leader in "consumer led 'growth'".

There used to be a British credit card brand called "ACCESS".
New Statesman ran an acronym competition during the time this card brand was in use, and someone came up with:

A Credit Card Encourages Silly Spending


How prescient this was.

 

[Hollu$]

Those are interesting facts.

I'm not a fan of credit cards myself. I have one, but I never use it. I simply have it for emergencies. The only time I did use it, was to buy an iPhone from Orange for £450 (I used it for the protection) and they took £900 off the card - it took me 4 weeks to get the money back and 9 weeks to get a new working credit card and pin.

I think they are more hassle than they are worth. I think in this day and age, people rely on them too much, and see it as additional spending power.

 

[0007]

Credit cards are designed purely and simply to allow people to live beyond their means.
This is true, to some extent, even for those who pay off the balance in full every month.

????? My CC rebates 0.5% of my monthly spend to me. I need to carry only a small amount of cash. My statement is an excellent record of what I'm spending. It's handy for internet purchases (I use this more and more). If I refuelled the car in cash I'd spend all my life at ATMs.

If I use my debit card the money comes straight out of my cheque account and I lose interest.

I suppose those who don't pay-off CC balance are subsidising others, but overall my CC seems like a good deal for me.

 

[montmorencyt2w]

????? My CC rebates 0.5% of my monthly spend to me.

I'll give you that (mine doesn't, as it happens, but it has other advantages**), although with qualifications. I think it costs retailers a fair amount to provide credit card use, and I expect your 0.5% rebate is eventually fed back into the prices you pay.

One could also argue that this rebate is an active incentive to spend, rather than to save, which may be good for the economy (so we are told, in these consumer-led-recovery times), but may not be so good for your personal wealth. I am sure that you are hard-headed and sensible enough not to be affected by this, but perhaps those less disciplined might be, perhaps at a subconscious level.

I need to carry only a small amount of cash. My statement is an excellent record of what I'm spending. It's handy for internet purchases (I use this more and more). If I refuelled the car in cash I'd spend all my life at ATMs.

I think you have missed part of my point then. Debit cards offer all the advantages of the above (with the exception of automatic cover on purchases (although my debit card provider offers a limited form of this)), so if debit cards had come before credit cards, the only additional advantage of the credit card would have been to get you into debt.

If I use my debit card the money comes straight out of my cheque account and I lose interest.

I'll give you that one as well, although again with qualifications. Although my current account doesn't pay any interest at the moment(**), it is linked to an e-saver that does, and it is a simple matter to swap money in and out, penalty-free, so the bulk of my ready-money goes into the e-saver until needed. Admittedly, the interest even on the e-saver is rubbish at the moment. However, before the near-zero-interest-rate policy kicked in, although both offered interest, the e-saver was better, so in practice, the interest on my current account was a negligible factor. OK, perhaps where large purchases are concerned, you may have a point.

If you use a credit card, even if you pay it off in full each month, you are still technically getting into debt, even if it is interest-free.

I suppose those who don't pay-off CC balance are subsidising others, but overall my CC seems like a good deal for me.

Of course they are subsidising others, but yes, on balance they are useful for those with the self-discipline to pay them off each month; whether they are actually a "good idea" though is moot.


(**Nationwide credit card and Nationwide Flexaccount current account. The latter was one of the first interest-paying current accounts, so it's a bit annoying that it now pays 0%, but c'est la vie. Advantage of both is that for the moment anyway, there are no transaction charges abroad. They said they were going to start passing on the Visa charges abroad, but I haven't seen this, even outside of Europe, so far, so still a good deal).



On another tack, when debit cards first came out, there was a TV advertisement popularising their use, featuring Denis Healey. For younger viewers, he was Defence Secretary and more famously Chancellor in the Labour governments of the 1960s and 1970s. The ad was done in quite an amusing way anyway, but the best bit was at the end, after he'd come out of a shop, and then walked up the street past a branch of Threshers. He looked to camera and made an amused/bemused/cheeky face.

This was a reference to the incident where the then Chancellor, Norman Lamont had apparently failed to make his credit card payment, which he had used for substantial purchases from Threshers. Of course it was in reality a trivial event, but the press played it up for all they were worth, as they are wont to do. Anyway, that bit of the ad was hilarious at the time, although people might not remember now. Unfortunately, someone complained, and they had to edit that bit out of it! :-(

 

[Splitlink]

Those are interesting facts.

I'm not a fan of credit cards myself. I have one, but I never use it. I simply have it for emergencies. The only time I did use it, was to buy an iPhone from Orange for £450 (I used it for the protection) and they took £900 off the card - it took me 4 weeks to get the money back and 9 weeks to get a new working credit card and pin.

I think they are more hassle than they are worth. I think in this day and age, people rely on them too much, and see it as additional spending power.

We have one for car hire, mainly. Avis won't let you have a car without one. Also, air tickets have insurance with credit cards. Otherwise, we are like you. I pay cash for ordinary consumer stuff, Christmas presents included.

 

[scose-no-doubt]

I use credit cards to live beyond my means when I feel like it. They are excellent.

 

[cristiano]

We have one for car hire, mainly. Avis won't let you have a car without one. Also, air tickets have insurance with credit cards. Otherwise, we are like you. I pay cash for ordinary consumer stuff, Christmas presents included.

Is Spain like it is here in Italy Split - cash still king? They had to introduce a law last year that limits how much cash you can pay for higher value things (especially cars), as it's harder to track and so much tax was avoided.
Previously people were happy to pay for a ten grand car in cash.

Has taken me ages to get used to going to the atm and not relying on cards being accepted everywhere - not such a bad thing though now I've adapted a bit.

 

[dccruibay]

The primary difference between debit and credit is in the way that the transactions are processed. When you run your bank card as a debit card, you will be asked to enter a personal identity number (PIN), and the funds are removed from your account instantly. When you select a credit option, the transaction is verified with your signature, and the funds may not be removed from your account right away, depending on how the store processes its credit card transactions. Many do what is known as “batching,” meaning that all of the credit transactions are run in a batch, typically at the end of the day, and it may take several days for your credit transaction to clear.
From the point of view of the merchant, the difference between debit and credit is typically a fee. Smaller companies may be charged less by the companies which process their card transactions for running cards as debits, so if you are visiting a small, locally owned business, you may want to consider selecting the debit option as a courtesy. In both cases, the store will get the money for the transaction, so both credit and debit transactions are protected from that point of view. This difference between debit and credit may not be important to you, and it doesn't apply to all merchants, as some stores negotiate deals with equal fees for debit and credit.
For you, the difference between debit and credit is actually quite significant. Typically debit transactions have a daily limit, for example, so if you are making a large purchase, it may not go through when you try to use your card as a debit card. In addition, banks handle disputes involving debit and credit transactions differently.
When you use a bank card as a credit card, you are protected from liability by the same laws which protect credit card users. If someone steals your card and you report it, you will not be liable for their credit transactions, for example. You can also take advantage of the credit card company's mediation process to handle any merchant disputes you may have.

 

[zsawevv212]

The features that make debit cards convenient - instant access to your money, lack of a required PIN number and not having to drag out your photo ID when you use it - make fraud that much easier. Unless reported quickly, theft of your debit card can quickly devastate your bank account. This is where you begin to see the difference.
Credit card companies are held to strict liability laws; the law limits consumer liability for credit card fraud to $50. For example, if you notice suspicious charges on your credit card statement such as double billing or an incorrect charge, the credit card company is obligated to investigate if you send in a written request within 60 days.
For debit card fraud, your liability is $50 if you notify the bank within two days of noticing the fraudulent charges. After two days, your liability increases to $500, and up to your entire account balance after 60 days. So, if you report the theft after two days, you can be held responsible for paying for purchases or charges that you didn't make. Although many banks have started to implement voluntary plans to limit customer liability to $50, there is no federal law regarding this issue.

 

[gnike]

I don't have a credit card and not planning on having one unless I acquire a stable job. I have a debit card and it's what I use regularly. At least I don't have to deal with interests and I'd get to manage my money.

 

[0007]

I don't have a credit card and not planning on having one unless I acquire a stable job. I have a debit card and it's what I use regularly. At least I don't have to deal with interests and I'd get to manage my money.

I can do the same with my CC - changed it now for one that rebates 1%.