Would someone explain debit cards to me?

[disneysteve]

I like it better than cash cause we can really track our expenditures and it comes out of our checking account as we spend it.

You can track your spending just as well with a credit card.

I don't want purchases to come out of my checking account as soon as they are made. Since my checking account doesn't earn interest, I try not to keep a lot of money in there. Using a credit card lets me keep money in an interest bearing account and only transfer it to checking when needed to pay a bill.

[Lori63]

I've been using one for 6 months or so. Of course I was also just about the last person to get a cell phone.

[ceejay74]

I would think there's no reason for Ima (the OP of this topic) to ever use a debit card. She pays off her cards in full, takes advantage of CC rewards, and has never had a spending problem her whole life. That's my advice to you, Ima!

As for me, I prefer the debit card for the time being. I have misused credit cards in the past and, even though I've been on the wagon for about three years, I still have one credit card with a balance. Until I get that paid off (hopefully by the end of 2010), I only use CCs when I absolutely have to (rental cars).

Another reason I prefer debit cards: It keeps me very involved with my finances, because I have to make damn sure I have money to cover a purchase. (I check my checking account at least every day, and the two or three times I've encountered a fraudulent purchase I've gotten it removed while it's still in the "pending transactions" area.)

Another reason: I'm paranoid about credit cards changing payment date without telling me and me getting hit with even a little bit of interest. All my bills are on autopay so if I didn't get notification, a payment might go in late. I don't know how that works with e-billing; presumably they'd send me the notification of an upcoming in plenty of time even if the date changed, but I don't particularly feel like giving credit cards the opportunity to do that.

Another reason I like it: I have one spreadsheet that tracks upcoming expenses and income, and the balance in my checking account is line #1 of that spreadsheet. When something gets paid it gets paid through my checking account, so it makes my accounting easier.

That said, once I've paid off more debt, I might revisit whether we're now responsible enough as a family to use credit cards. I feel like we could easily overspend in the grocery category; sometimes we go into next month's allotted amount. So I'd probably end up checking the credit card account almost daily to make sure we're sticking to budget. But I like the idea of rewards, so if those are still being offered with some cards once I'm CC-debt-free, I might consider making the switch.

[disneysteve]

I'm paranoid about credit cards changing payment date without telling me and me getting hit with even a little bit of interest. All my bills are on autopay so if I didn't get notification, a payment might go in late.

I have a question about this. If the bills are on autopay, how can the payment possibly be late? If they change the due date, they would also change the pay date, wouldn't they?

[minnie1928]

I have a question about this. If the bills are on autopay, how can the payment possibly be late? If they change the due date, they would also change the pay date, wouldn't they?

I can see another problem, other than the potential for a late fee. If they would change the date and you were on autopay, it's possible that you wouldn't have enough money to cover the auto payment or that it would make you short in cash for other purchases. Again, this depends upon how much cushion you keep in your checking account.

[jasonnoguchi]

Personally, I don't use cards but if I have to, I would choose Debit over Credit anyday, spending only as much as I would allow myself to (i.e the amount you put into your debit card at the beginning of each month).

[ceejay74]

I have a question about this. If the bills are on autopay, how can the payment possibly be late? If they change the due date, they would also change the pay date, wouldn't they?

I should hope so, DS. Like I said, paranoid. I have an irrational fear of being tricked by CC companies.

[mom-from-missouri]

Thanks. I wasn't aware of that feature. When using it as a "credit" card, do you get any added buyer protection as you would from an actual credit card?

Yes, I get buyer protection, and one time had a charge removed by my bank with no trouble.

[Snippa]

I've used debit cards for years and love them! I rarely use credit cards, which I don't trust as well, either. Have had some bad experiences with CC companies. And I've never had a hold placed on my card except by a rental car company. Odd that others might do that. I never carry cash, always use debit and never have any problems. This lets me spend only what I have and it works great for my purposes.

Dee

[Beppington]

I really can think of no reason to ever use a debit card.

I hear it stated that consumers tend to spend 12%-18% more when using a card instead of cash, because you're actually touching the cash that's trying to fly out of your hand instead of just writing or agreeing to higher numbers.

I think it's probably true even for a thrifty feller like me.

That said, I do use a debit card for everything. Maybe I should revisit that.

[Beppington]

I should hope so, DS. Like I said, paranoid. I have an irrational fear of being tricked by CC companies.

This is why I quit using CC's altogether. Discover Card was really screwing up my account, trying to charge late fees when they shouldn't, etc. Things just didn't make sense, & I just couldn't figure it all out, & I finally realized I really didn't care about the card enough, & the fastest/ easiest/ simplest thing to do to clear it all up was to cancel the stupid thing. Now, they would always wipe out these "late fees", but I always had to call & have a big conversation discussing it & finally they'd do it. But who wants to do that all the time??

Same thing happened with my ADT security system account. Now: cancelled. I'll take my chances with the mere possibility of bad guys vs the "bad guys" that work in the ADT accounting department that I have an actual agreement with. It's not enough that they make a decent profit on me, they've got to push it & try to rip me off to increase their profits.

[disneysteve]

I hear it stated that consumers tend to spend 12%-18% more when using a card instead of cash, because you're actually touching the cash that's trying to fly out of your hand instead of just writing or agreeing to higher numbers.

I think it's probably true even for a thrifty feller like me.

That said, I do use a debit card for everything. Maybe I should revisit that.

I hear that stat all the time. I also hear that the average household has about $10,000 in credit card debt. I also hear a dozen other financial stats that don't apply to me or my wife.

We do not base our purchases on how we intend to pay. That just isn't how we shop. Whether we are paying cash, debit, credit, check or gold doubloons, we would buy exactly the same things. I'm sure that stat does apply to some people. It just doesn't apply to us. We'll stick with the convenience, rewards and protection of credit cards.

[GREENBACK]

I hear that stat all the time. I also hear that the average household has about $10,000 in credit card debt. I also hear a dozen other financial stats that don't apply to me or my wife.

We do not base our purchases on how we intend to pay. That just isn't how we shop. Whether we are paying cash, debit, credit, check or gold doubloons, we would buy exactly the same things. I'm sure that stat does apply to some people. It just doesn't apply to us. We'll stick with the convenience, rewards and protection of credit cards.

I second that. I understand that the reality of paying with cash is more painful than the seemingly carefree use of a CC. I went the strict cash route many years ago and learned how to handle my finances. I now prefer CC's for most purchases for the reasons stated.

I don't trust CC companies anymore than anyone else but I don't carry over any balances and won't pay any fees and will terminate use of a company's card in a heartbeat if I feel I've been wronged. Stats mean nothing to me, I know how to manage my finances.