Debit cards, Pros and cons

[Ima saver]

I know this has been discussed , but what are some of the pros and cons of using a debit card??

[neatdesign]

PRO -- You can only spend what's in your bank account and prevents you from buying on credit (ie, spending money you haven't earned yet).

CON -- Unless you are diligent about monitoring all of your expenses, even the tiny ones, it can be easy to lose track of how much you're actually spending overall. Also, unlike credit cards, there are fewer protections when it comes to disputing charges bought with a debit card.

~ Jenney

[disneysteve]

CONS:

Generally, no rewards, though there are some exceptions.
No "float" on your money. It comes out of your account when you spend it, rather than up to a month or so later.
No added value services, like extended warranties, rental car insurance, etc.
You can only spend what is in your account (previous poster called that a PRO, but I feel differently).

PROS:
?? Dont know. I don't use one and don't plan to. Too many pros from the credit cards.

[safari]

I only keep a minimum in my checking account and always use a credit card, so I don't have to worry about spending more than I have and paying overdraft fees. In the meantime my money is sitting in a high-yield saving account and earning interest. When I get the credit card bill, I transfer just enough money into my checking account to pay that bill in full every month. I charge all my purchases to American Express Blue Cash card, which gives me cash back and offers a lot of extra benefits, like rental car insurance, extended warranty, purchase protection, etc. Like Steve, I never used a debit card to pay for anything and never going to.

[JanH]

I'm just the opposite. I do better if the money leaves the account immediately. I keep all receipts and enter them daily into my budget sheets. I file receipts into an envelope for that month. I have a buffer and also know how much I can spend because of the budgeted amounts. I got into a lot more trouble using credit cards. But that's just me. I guess for me, it's like spending cash without having to get it from the bank all the time.

[luvnspnful]

I'm fine using either payment method, but my DH isn't worthy of carrying a CC . In past years, he used his (and our joint) CC's to buy a bunch of stupid stuff i.e....$12k for arcade games in the basement, seasons tickets to his fave baseball team ( when we could't afford our cell bills! )... so for him, it's strictly debit cards. I control the finances, and he contributes by making deposits only and giving me receipts. All his CC accounts are closed, and PIF. I tend to pay with my debit card mostly, but will use a CC for larger purchases. (though I'm working on getting out of debt, so large purchases are RARE).

I prefer my Line of Credit- lower interest, and I keep track with my checkbook register.

[poundwise]

Debit card facts

Check card problems to watch for

DEBIT CARDS

[Cassandra]

I'm with you, Jan. Once I start spending, it's hard for me to stop and a credit card would be BIG trouble for me. The debt I would get in would far outway the benefits I would receive.

I have an ATM card and I love using it. I withdraw how much I need and once that's gone, it's gone. It helps me manage my money easily. It also prevents me from getting into trouble I might not be able to get out of. I update my register immediately along with a spreadsheet I created of how much I have available.

The only downside is the fee charged when I use my ATM card at an ATM machine not with my bank. However, I've only once had to go to ATM not with my bank.

Cassandra

[CoryWM]

The biggest thing that has been irritating me lately.. Is the "Fee" that everyone is charging now to use a Debit Card. I was at a gas station a few times, and I say Debit, they say, that'll be a 50 cent or 75 cent fee.. I say, ok than credit.. Still the same fee!

AM/PM gas stations charge at the pump even to use debit. So I'm torn. I hate carrying cash, just because all the coin change I get, gets lost/shoved into a jar etc, not earning interest. It's essentially lost money until I turn it back in to the bank. Or using a debit/creditcard and getting charged fees

[neatdesign]

We always use our debit card as a credit card; I don't have a clue what my PIN is. I've never encountered being charged a fee for using my debit card, either as a credit card or a debit card. On the extremely rare occasions that I use my debit card to get cash, I never use an ATM but rather get cash back after buying something in a store. If I were to use an ATM, though, my bank reimburses me the ATM fees. Of course, I can't ever remember my PIN so this rarely happens, maybe once every three years or something.

If my husband and I trusted ourselves to actually pay our credit card in full each month, instead of saying, "Well, that can wait, something else just came up," then we would probably use credit cards more. But we're not at that point yet, so debit cards it is.

At the end of the day, it's really what makes the most sense to the individual. I think whatever helps the person stay out of debt, that's the method they should go with.

~ Jenney

[PrincessPerky]

so far we have no fees for credit or debit, and I like the immediate leaving...I do not like CCs in general.

I figure sooner or later we will all have chips in our hands instead of plastic to carry....

[Ima saver]

I don't have a debit card either, clark howard says it is a big no no. I only put enough cash in my checking account to cover my bills. That money comes out of my cash envelopes. I do charge on my credit account, but I have a cash envelope for that also. I pay my credit card in full each month. My husband charges all his building supplies on the credit card and that is immediately deducted from the house account. However, we do get cash back on our credit cards!

[scfr]

Ｉ’ｖｅ　ｎｅｖｅｒ　ｈａｄ　ａ　ｄｅｂｉｔ　ｃａｒｄ, but I pay my credit card off every month．

I know someone who uses a debit card and does not have a credit card because she knows that if she had a credit card she would charge it up to the limit; having just a debit card is a way of forcing herself to avoid debt.

[disneysteve]

Originally Posted by scfr

having just a debit card is a way of forcing herself to avoid debt.

I don't quite get this. If you can't be trusted to not overspend, a debit card can get you in trouble just as well as a credit card can.

Let's say I have $1,000 in my account. I go wacky at the mall and spend $500 on clothes, shoes, CDs, jewelry, whatever. That leaves me $500 in the account. I get home and realize my car payment and my rent are due next week and I now have not enough left in the account to cover those payments.

On the other hand, if I had done that spending spree on a credit card, I'd still have $1,000 in my account. I would be able to pay my bills without a problem and, if necessary, could carry the balance on the CC for another month until I could pay off the full amount. That isn't the best option, but it is better than coming up short and being unable to pay my bills.

[Ima saver]

I agree Steve!

[lgslgs]

I use our debit card for most purchases. We rarely use cash - in fact the last cash we took out was $40 on July 5, 2006 and we still have most of that left. No transaction fee for that because it was done at the grocery checkout.

We use the debit card for all purchases. Having each transaction post to the bank right away makes them handy for downloading into MS Money. We also add a lot of detail to each receipt in MS Money so we know what we spend for groceries staples, what (if) we spend for grocery non-staples, how much we spend on household office supplies, cleaning supplies, garden seed, or whatever.

We use the debit card and MS Money budgeting much like people use paper $ and envelopes. We just feel that it gives us much better historical records than the paper and envelope system would. I just like to be able to instantly pull up the past several years of info and be able to see things like how many times we filled up the gas can, what we spent, and how much money our cow has saved us since she started mooooing the lawn.

I really don't worry about whether or not it has any credit card protection with it because if we buy durable goods we check the manufacturer's warranty first and only buy through merchants we trust. Lost or stolen cards are also very unlikely because of how we handle and store our cards when not in use.

For us, debit cards are all pro and no con.

Lynda

[Ini_g]

They are actually more easier to manage. And you don´t spend money that not are yours.

Common credit cards are fire, you have to manage them with caution.

[safari]

Originally Posted by lgslgs

I really don't worry about whether or not it has any credit card protection with it because if we buy durable goods we check the manufacturer's warranty first and only buy through merchants we trust. Lost or stolen cards are also very unlikely because of how we handle and store our cards when not in use.

Someone can steal your card without stealing it physically. There are many ways that can be done. For example, when you give your card to a server at a restaurant, he/she takes your card and double swipes it, then uses the information from the magnetic strip to make a new card with your information on it. When a criminal uses that card, the money from your cheking account is gone. However, if you were using a credit card, you would just call your credit card company and dispute the charge, so you won't have to pay for it. This happened to my mother. She received a credit card bill showing some $300 charge that didn't look familiar. When she called the credit card company, they told her that somebody physically swiped the card, but she never lost her card. Someone made a new card with her information on it. The credit card company conducted an investigation and that charge was dismissed.

[PrincessPerky]

steve...on avoiding debt with a card...you don't see it as having 1k to spend, you see it as having 1k, 900 of which is for the mortgage, 100 for groceries....

Yeah some people think of it wrong, and others use it, just like with CCs, you don't see your CC as unlimited spending, and others don't see the debit as 1k free cash.

On the other hand if Joe Schmoe needs a cash only plan and we try to talk him into a debit card, he just might end up in debt trying to pay bills.

Then again Jane Shane might use debit now, try to switch to cash and find that she has more cash than she needs and no banked money for the bills. (or none for the car repair that just appeared....)

You gotta find a plan that works for you to the best of your 'bent' and then keep looking for ways to improve.

[Coleroo]

To me there are no "pros or cons" to debit cards. A debit card is simply a tool one uses to pay someone with your own money. Instead of carrying cash (to lose) or a check (hassle of writing) you simply swipe a card. You're spending your own money, and you think harder about spending your own money. If its VISA backed, you are protected over a certain amount for fraudulent activity. Some banks offer reward incentives for using it. If you lose the card, you call up your bank to have it cancelled & then replaced. It's quick and convenient. Its just another way to spend your own money - instead of cash, like our grandparents carried, we carry one little card tied TO our cash.


Credit cards are a whole different ball game and should never be compared to a debit card... they're nothing alike. Its like comparing apples with walnuts! With a CC we're spending someone ELSES money, and some of us have a harder time controlling it. Its also much easier to spend "a little more" than you normally would because of the credit line cushion. We also pay interest on any unpaid balances... yuck!!!