Debit cards, Pros and cons

[jukebox9988]

In my case, I use my debit card to get out of debt. When I conceptualize using the banks money vs. my money, my spending habits completely change.

Whether you like it or not, using CC will cause you to spend more, period. And it's not always about earning interest somewhere else.

Once I get out of CC, then I may revert to CC for the added protection, but it makes no sense to use someone else's money when I abused this priviledge in the past.

Instead of worrying about arbitrage, I allocate my monthly expenses to my debit card, save and invest everything else, then pay my CC last of the month.

There's never more than $100 on my debit card, and I still carry around CC ffor emergency purposes only.

Please understand that everyone has different weakenesses, tendencies, and spending habits when it comes to money. CC only worsen our human flaws; DC keep the playing field level.

Just my 2 cents.

[Pupart]

. Also, unlike credit cards, there are fewer protections when it comes to disputing charges bought with a debit card.

~ Jenney[/quote]
It may depend on who you got your debit card from.
I only use a debit card issued by USAA. I have disputed charges twice and had no problem. I called them, told them the problem, and they credited my account.
Bonnie

[disneysteve]

Originally Posted by jukebox9988

Whether you like it or not, using CC will cause you to spend more, period.

Just to be clear, using a CC may cause SOME people to spend more. You state it as if it is an absolute that affects everyone and that really isn't true. As with most financial issues, results vary from person to person.

[poundwise]

Originally Posted by Pupart

It may depend on who you got your debit card from.
I only use a debit card issued by USAA. I have disputed charges twice and had no problem. I called them, told them the problem, and they credited my account.
Bonnie

That is just the problem however.

If you use a credit card and have an erroneous charge, you are dealing with the card company to get the charge removed. You don't actually lose anything at any time except for the time and hassle of dealing with it.

If you use a debit card and have the same mistake/problem, the money is gone from your bank account and you have to deal with the bank to get the money credited back. Similar time and hassle but meanwhile, your money is gone. Even if the bank credits it back quickly, you had better hope that checks or other debits didn't hit your account during the time that your balanced was reduced or an auto-draft could be refused and checks may bounce. In those cases, most good banks will not charge, or will refund, their overdraft charges, however, the institutions to whom you bounced items will not care about the reason why and you will owe them late fees, bounced check or denied transaction fees, etc.

I have no vital argument either way. I think it is largely a personal decision. I use a credit card that I pay each month. It is purely a cash flow tool, not a means to borrow money or overextend with purchases. It works splendidly for us. However, I advise my parents to use their debit card. It works better for them as they have had real problems with managing credit in the past and it helps them manage their current budget as well.

However, it is foolishness to deny the facts. A debit card does not have the same protections as a credit card. Period. Is it dramatically dangerous to use one? No, of course not. And there are potential issues with credit card usage as well. But, in either case, and particularly with debit cards it seems, people need to be aware of what can go wrong and what can happen if it does.

[poundwise]

Originally Posted by disneysteve

Just to be clear, using a CC may cause SOME people to spend more. You state it as if it is an absolute that affects everyone and that really isn't true. As with most financial issues, results vary from person to person.

Yes, SOME. I have a budget. If you have a budget and adhere to it, then it hardly matters what method of payment you use. When people do not have solid budgets and/or do not stick to them, THEN I believe that people using plastic (credit or debit really, but yes, credit more so) will spend more than people using cash.

The statement, "using CC will cause you to spend more, period" is just not true. As if a credit card had some magic "Lord of the Rings" evil spending power. People who are not in control of their budget/finances will get in much more trouble with a CC than with cash or even a DC but if one is actively planning, tracking, and otherwise managing their money, it hardly matters.

[disneysteve]

Originally Posted by poundwise

People who are not in control of their budget/finances will get in much more trouble with a CC than with cash or even a DC but if one is actively planning, tracking, and otherwise managing their money, it hardly matters.

Exactly. I never think about how I plan to pay while I'm shopping. Once I reach the register, see the total and look in my wallet is when I decide. If I happen to have a surplus of cash on hand, I may pay cash. Otherwise, I charge it. There are times when cash builds up. Perhaps I went out to dinner with friends and everyone gave me cash and I charged the bill. Or maybe I went to the casino and came home with a couple hundred more than I left with. When that happens, I may pay cash the next time I'm at the grocery store, but again, that decision gets made at the register, not while I'm walking through the store. I buy what I need when I need it with no consideration at all to how I intend to pay.

Honestly, I've never been able to comprehend people saying that they spend more with a CC than with cash. I buy what I buy. How I plan to pay doesn't in any way influence what I buy.