Debit cards, Pros and cons

[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]

Some Pros.

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]

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!!!

[disneysteve]

Someone can steal your card without stealing it physically.

Absolutely. Earlier this year, I had a fraudulent charge show up on a Visa card bill from a card I never use and don't carry with me. The card was still safely in my house. I have no idea how they got the number.

[lgslgs]

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.

See, that would involve the card actually leaving my hand.

We don't go out to restaurants and don't shop in any place where we'd have to hand a card to anyone.

If someone wanted to get my card they'd have to physically pull it out of my hand while I'm at the checkout, or take my wallet out of my front pants pocket without me noticing, or take it from where it is locked up in the house while we are home - dodging big dogs to do so.

I'd certainly be more concerned about theft if we led a lifestyle that involved handing off a card to someone else and then having to hope that they were honest.


It isn't the fact that it's a debit card that makes it risky for a lot of people, it is whether their handling of money is exposed to risk. Folks who's lifestyles involve handing a card to strangers, who don't feel that plastic money is the same as real money, or whatever might find that the extra protections of a credit card give them some insurance against misuse.

For us, though, our biggest risks are that we wear out the stripe on the card (so we have a back-up credit card available), or maybe that we both get in a car wreck and a renegade ambulance tech takes the card out of a pocket un-noticed. Not really a very high risk environment. Cash money is even a much bigger risk for us because of the chance that it turns to dust before we get around to spending it.

Lynda

[Coleroo]

Absolutely. Earlier this year, I had a fraudulent charge show up on a Visa card bill from a card I never use and don't carry with me. The card was still safely in my house. I have no idea how they got the number.

It could have been from anything - from an employee at the bank, to a hacker breaking into the CC banking system, to someone finding a piece of paper with the number written on it! It terrible. And people sell those numbers on the black market.

AND, the sad thing, most businesses really do NOT care if the right owner is using the card or not - they just care about getting their money. I work in a state mandated deaf relay call center... one service we provide deaf users is internet (IP) relay calling. Unfortunately the internetional "nigerian / 401" scammers know our rules and use our system to place scam calls to businesses. We have been fighting the FCC for years to get a better stop in place for scams, but the scammers are always one step ahead. I have seen calls in which a scammer will go through 10-20 different credit card numbers before one is validated by the company (meaning, "enough money available to make the purchase go through" usually costing thousands of dollars). The company will just keep running the numbers for them until one hits!! Its scary how easy it is for them to obtain (and use, and authorize the use of) a credit card number - we see it every day, thousands of times a day.

[scfr]

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.

I think this is a classic illustration of "whatever works for the individual" as being the right solution. For the person I mentioned, they are responsible about paying their fixed bills (like rent) on time, and they are sticklers about avoiding bank charges like overdrafts, but apparently the allure of "minimum payment only" was too much which is why they got rid of the CCs and just use a debit card.

Their choice isn't mine, but I can understand the point of forced discipline and doing what works for the individual. For example, I like pizza much more than is good for me, so my solution is to only buy frozen pizza a couple times a year. If it was there in the freezer, I know myself and know I'd eat it more. Of course, I could always pick up the phone and order in a pizza, but I just don't do that. So, for me a phone is okay to have around (even tho' it's a tool that can be used for getting pizza), but frozen pizza is dangerous. Sure if I were perfect, I could keep a freezer full of frozen pizza and never give in to temptation. But, alas, I am far from perfect.

[disneysteve]

most businesses really do NOT care if the right owner is using the card or not - they just care about getting their money.

We ordered a pizza from Domino's last night. As usual, I charged the purchase (we get double reward points for dining). When the driver came, he said he had to make an imprint of my card, something they never did before. He said it was to cut down on usage of stolen card numbers.

Of course, all that really proved was that I physically had the card. It didn't prove that it wasn't stolen, but I guess often theives only have the card number and not the actual card.

[lgslgs]

We ordered a pizza from Domino's last night. As usual, I charged the purchase (we get double reward points for dining). When the driver came, he said he had to make an imprint of my card, something they never did before. He said it was to cut down on usage of stolen card numbers.

Of course, all that really proved was that I physically had the card. It didn't prove that it wasn't stolen, but I guess often theives only have the card number and not the actual card.

Now that would make me nervous. When he imprints the code he can also read the security code number on the back. He has your name, address and phone number from the pizza order. He can read the expiration date of your credit card from the imprint or right off the card itself. He even knows whether your card is made out to Disney Steve, Disney Steven, Disney Stephan, or Disney Q. Steve.

Sort of makes me glad we live too far out in the sticks to send out for a pizza. That's putting a lot of trust in your fellow man - who's probably not paid very highly to boot. Hope you tipped well.


Lynda

[tabbycat31]

the big cons of debit cards are one fradulent transaction can wipe out your whole acct. That happened to me last Feb when someone charged a Plasma TV at some shop in Texas. I was getting paid, logged into my bank acct, and saw my paycheck was garnished to pay overdraft fees, and my checking and savings acct were wiped out. It took me several hours to clean that mess up with the bank.

I havent touched my debit card since except for ATM use. In fact I want to switch to an ATM only one.

[buzz]

Honestly, has no one on the planet thought of having an online account dedicated to debit card use. Get one that reimburses ATM fees and keep $75 in it.

That puts to rest about 98% of the hysterics I hear about debit cards.

Having said that, I prefer a credit card.

[disneysteve]

Honestly, has no one on the planet thought of having an online account dedicated to debit card use. Get one that reimburses ATM fees and keep $75 in it.

Can you explain what you mean? How would that eliminate problems? Aren't debit cards from online banks subject to the same problems, theft, etc? Also, what good is an account that only has $75 in it?

As I've said, I don't use debit so I don't really care but I'm always curious to hear other opinions.

[Ima saver]

Tabbycat, that is terrible. That is what I heard can happen and often does.