CC vs. Debit vs. Check Card

[Eagle_and_hawk]

We use our Hilton Amex card for everything we possibly can, however we handle it differently than anyone else that I have ever seen in regards to paying it off. I am not really concerned about 45 day float so we can gain $2 of interest as their is just more piece of mind, knowing it's paid off & of course the points.

We actually make a payment each week on ours, usually on Friday or Saturday. During the week, for example, we might make 10 purchases between gas, groceries, drug store, eating out, etc. Years ago we would have paid cash or used debit card. Now it's Amex for everything and I have not found too many places that don't take it. So at the end of the week, I just sign onto Amex's WEB site and just pay close to the balance, usually just rounded off. If the balance was $206, I would probably just pay $200.

Instead of having these same 40+ transactions go through our checking account a month, there is only four, one for each payment in the month. I don't want to have to keep up with what is on the card for 30-45 days before they send a statement. It's just less of a hassle to do it this way and the points we have gotten & the free hotel stays we have used points for, are well worth the effort. Since the card has no annual fee, it's a complete win-win for us as it just makes things easier.

A couple of things with this method is there are many reward cards. Some cash back, points or miles. We know for our use that we get a better value in staying at really nice hotels, than getting cash back as none of the cash back cards can pay enough to stay at these hotels. You also have to pick a card that does not restrict the number of payments you can make a month and has a 30 day grace period. Hilton Amex does not have a limit on # of payments, but our backup Hilton VISA card with Citibank, is limited to 4 payments a month. Needless to say it is rarely used except where I can not use Amex. Both have a 30 day grace period & no annual fee.

The other thing this may help is your Fico score. If you normally charged say $1000 a month and pay it off when you get the statement, that $1000 balance is what goes to the credit bureau as last months reporting. Pay it off every week or before the close the statement, and the balance that is reported may be less than $100 as payments were made during the month.

Since we are using the banks money & not ours, easier to correct it the card number gets stolen, which it has about 3 times over the past 10 years.

It's just the way we have found to easily keep up daily spending & get something in return for free.

[krantcents]

Personally, I like credit cards better because of liability and certain benefits like cashback 91-3%) and earning miles.

[disneysteve]

You should have some type of insurance that covers all consequences of a credit card being stolen - this scenario included. Just happened to my boyfriend last month and he had everything taken care of for him thankfully.

There is no need to have insurance for this. You have zero liability. What is there to insure against?

[Sissta2009]

You should have some type of insurance that covers all consequences of a credit card being stolen - this scenario included. Just happened to my boyfriend last month and he had everything taken care of for him thankfully.

[Slug]

To summarize:

Debit and Check cards are the same. The only difference is the interchange fees paid by the merchant. Use it as a debit card (enter your PIN) to lower the merchant's fee. (As an aside I should note that since there are debit card users in this thread you may find Perk Street's debit card of interest - it pays 2% rebate to you on all purchases with the card - a deeper analysis can be found on my blog).

Credit cards allow you to delay payment. I get a 45 day interest free loan where my money compounds on a crappy interest rate before paying the balance in full EVERY month. Please don't buy anything you can't already pay for. That's always a losing proposition.

Oh, and raiding investment accounts for hedonistic pleasure is "epically stupid," but it sure sounds fun.

[disneysteve]

And go another step further, my co-workers love telling me to just buy whatever item, if i've got the money. Just because I have it saved, doesn't mean I'm going to splurge on a $2000 Marantz processor for my home theater right before Christmas.

Yep. There is a big difference, to me at least, between having the money and being able to afford the purchase. I could raid our investment accounts and take a cruise around the world (a dream of mine) but that would be epically stupid.

[cypher1]

I guess I'm just old fashion now. If I can't afford it I don't buy it and especially not with a cc. I save up for something and pay for it.

No shame in that. For large clearly "want" purchases on myself, I only buy if I have the money saved. True, I'll put on a CC to pay in full, but i can't just justify buying something unless I know I have the $. And go another step further, my co-workers love telling me to just buy whatever item, if i've got the money. Just because I have it saved, doesn't mean I'm going to splurge on a $2000 Marantz processor for my home theater right before Christmas.

[disneysteve]

I guess I'm just old fashion now. If I can't afford it I don't buy it

I second that. I use a CC all the time but only to make purchases that I already have the money to pay for. I use the CC as a convenience, not to give myself "breathing room" before I need to pay the bill.

[littleroc02us]

Why would you want to pay for it now instead of up to 45 days later. For large items, that give you room to work with and not have to dip into emergency stash (money you keep hidden either at a don't-touch bank or in liquidate-able goods such as precious metal, guns, etc or even just selling something you don't need) or emergency fund from you saving account. I have have to do it but I do pay for my car and homeowner insurance in lump sum and that cost more than what a 50' TV or nice laptop cost so I use CC in order to have that 45 days breathing room.

I guess I'm just old fashion now. If I can't afford it I don't buy it and especially not with a cc. I save up for something and pay for it. Never touch your EF account unless it's an emergency. EF's aren't for T.V's and cars, and toys...

[nick__45]

yes, when I use my check card, I have to hit the credit button and sign, but the funds are immediately deducted from my checking account within a day. I also use it as an atm card. I have never tried the debit option. No reason to.

Why would you want to pay for it now instead of up to 45 days later. For large items, that give you room to work with and not have to dip into emergency stash (money you keep hidden either at a don't-touch bank or in liquidate-able goods such as precious metal, guns, etc or even just selling something you don't need) or emergency fund from you saving account. I have have to do it but I do pay for my car and homeowner insurance in lump sum and that cost more than what a 50' TV or nice laptop cost so I use CC in order to have that 45 days breathing room. That way, I never have to transfer more money from saving to spending account. I did just that last week and I am breathing easier knowing that I won't see that bill for another 39 days in which my auto-deposit will be enough to cover it and I just have to make sure tighten up the old financial belt a little as far as eating out or buying junks.

I did buy two durable good items that will hold value. I don't do the gold things as it was illegal to own gold at one point in time so I don't want to give up my hard-earn money. These two things set me back $3500 but I didn't need to tap into anything or sell anything. After some work, I can probably get $7000 for them but I think I am going to keep them for 10 years until things pick up. The bottom is falling out on my precious investment because the people can't no longer have expensive hobby during bad time.

[littleroc02us]

littleroc, here is what Visa says

A Visa Debit card, also known as a Visa check card, is a debit card that works like a check...

Visa Debit/Check Card | Personal | Visa USA This page is the first return when I googled "Visa check card."

I really think we are talking about and using the same cards and systems.

I don't know if you saw my post from before but here is what I said:

Hey guys maybe this will help. When I pull out my bank card out of my wallet it has a Visa log on it, it says debit card at the upper left and check card on the right. When I go to the store to buy something, they say credit or debit. I choose credit and I don't enter a PIN number and I sign and it is deducted directly from my checking account. If I choose debit then I have to enter a PIN number and it is deducted also from my checking account. Is the only difference then besides entering the PIN number some kind of profit that someone is making when you have to sign the bill?
Edit/Delete Message

[cypher1]

Imagine this scenario speaking from experience about 10 years ago. If you think about it a credit card allows a consumer to basically use it as a payday loan type system where you borrow the money and only pay the minimum on it for a while and maybe sometimes you pay more, but it gives the user the ability to overextend themselves for a longer period of time, kind of like giving themselves more money to use sooner and then pay back at a slower pace. I did this when I was young and dumb. I could push the payments of the cc bill further out which allowed me to use more of my disposable income. Now I know how dumb that was.

CC can definitely be seen as temp payday loans, as you stated. I agree that is very risky for others to be tempted charge it now, thinking they'll pay it all off each month. It kind of goes back to a joke about my co-worker saying my generation (under 30) is all about "Me Me, Now Now". Meaning a lot of us are all about instant gratification, whether its cars, cell phones, clothing, hobbies, etc. Personally I feel better buying something in full, appreciate the feeling of "owning" even if I splurge. Heck, I know others already spending their future tax returns by charging things now, instead of waiting till Feb to at least file.
But I will just add another example to further agree with you. Another good friend of mine was laid off just over 2 years ago. Unemployment was out months ago, he has 6k+ in CC debt alone, and moved into his sis condo, living for free. He currently has a p/t retail job 20 hrs per week, and luckily can walk to work. He currently pays everything in cash or Check/Debit card, and still able to pay minimum debts, +misc expenses. He now knows the CC didn't help for saving him, so he basically cut up the card, but kept the account open. So I can definitely relate to your scenario since I see others having to do the same.

On another note, my credit union card also says Visa Debit on bottom right, and top right Cash $ Check Card. I've never used a pin for purchases, besides ATM. But PIN would make sense for security in order for physical purchases (excluding online), vs just a signature. Right now if you're card was stolen, the thief can still purchase without checking ID/compare signature. But if Debit would only allow a PIN, then if they don't know it, purchase can't complete. Kind of like an ATM withdrawal, you can't take out money without the PIN, and they definitely won't validate with a signature

[Joan.of.the.Arch]

littleroc, here is what Visa says

A Visa Debit card, also known as a Visa check card, is a debit card that works like a check...

Visa Debit/Check Card | Personal | Visa USA This page is the first return when I googled "Visa check card."

I really think we are talking about and using the same cards and systems.

[littleroc02us]

Some places may only accept the debit option. You will usually find that with places that don't take credit cards. For example, some schools may accept debit cards for tuition payments but only as a debit, not as a credit, since they pay more to process credit card transactions.

So, these are good examples of the differences between debit and check cards/cc's....

[disneysteve]

Funny stuff. Why even have the debit option then?

Some places may only accept the debit option. You will usually find that with places that don't take credit cards. For example, some schools may accept debit cards for tuition payments but only as a debit, not as a credit, since they pay more to process credit card transactions.