Discounts for Debit Cards?

[disneysteve]

Maybe I am old fashioned, but I consider buying anything beyond your means fiscal irresponsibility. My comment was redirected more at folks outside this forum - how many people truly get something on their credit cards and pay it off immediately? In my personal experience, not very many.

I totally agree with the bolded part. I, too, consider spending beyond your means to be irresponsible. It just happens to be a big pet peeve of mine when people equate credit card use with irresponsible spending. People can and do spend irresponsibly regardless of how they choose to pay. The guy paying cash might have taken out a big home equity loan to fund his lifestyle. Does that make him more responsible? What about the girl who spends every penny she makes each week and has zero savings? Is she more responsible because she pays cash for all of her purchases? Of course not. Fiscal responsibility has nothing at all to do with how a person pays for their purchases but rather how they manage their money.

The stat I generally find is that about 1/3 of CC users pay their bills in full each month and that most who do carry a balance owe less than $2,000.

When you hear the stat that the "average" credit card user owes $9,000, that number is very misleading and is greatly skewed upward by a small number of people who owe very high amounts. It is just like the stat that 1 in 5 homes is underwater on the mortgage. If you remove the 5 worst states from the equation, the number is tremendously lower. So 45 states are doing reasonably well and 5 states make the national "average" look horrendous.

[Volkov]

Steve, we could debate ad infinitum about what truly constitutes fiscal responsibility, and whether or not using credit cards constitutes such.

My opinion is that credit cards are lines of, well, credit -- i.e. debt. I do not see any circumstance when you would need to use debt of any form, particularly for your daily activities, except in case of major life events or emergencies.

Now, you're probably right in that there are a handful of folks knee deep in debt that skew the numbers, but that still does not change my opinion of the practice. And I say this as someone who has made the mistake (only twice - once in grad school and once for the wedding; but both times, I was surprised at how much they gouge you).

IMO and all that, of course. Cheers.

[disneysteve]

Volkov - Didn't mean to start a debate. Like I said, it is just a pet peeve of mine when people assume everyone using a credit card is in debt or spending above their means. That just isn't the case. We use credit cards as a convenience, to avoid carrying a lot of cash, to get the rewards, for the added consumer protection on our purchases and for budgeting reasons as it is much easier to track spending with credit than with cash. It certainly isn't right for everyone but it works great for us.

[Volkov]

Fair enough - I just use my debit card as a credit card for exactly the same reasons.

[marvholly]

I use credit cards for much the same reasons & way DS does. Example: I prefer to pay for gas that way (faster & easier w/pay at pump) + rewards/cash back I get.

I do NOT expect to ever see a discount for a debit card. In my area there is NO discount anywhere for using REAL cash and there are still fee(s) a merchant must pay to take debit cards even if they do go down.

[Like2Plan]

We use our CCs in the same way as Disney Steve does. We charge everything we can and pay it off when the bill comes in. I have experimented with paying the CC off before it closes out for the month or right after we make a major purchase, but haven't really seen any real benefit to doing so (and it is more work for me).

The big hook for us was the reward card. Years ago, we paid for groceries by check only. Then, the grocery store we frequented offered a CC that gave 5% off our purchase. When that incentive was watered down to 3%, we looked at different cards with different incentives.

We now have a card that gives an incentive which is worth far more to us than just the straight incentive. It is an airline card and we earn credits which result in free airline tickets. In addition, the airline program that we participate in will award a companion pass that is good for an entire year of travel if we earn enough total credits in the year by flying, spending or participating in partner programs. We have been able to earn the CP for about 3 years now. Typically, we find the best deal we can on DH's ticket, I use the CP and we use the other free tickets for our son (when he is not away at college). DH and I have been able to enjoy quite a few trips using this pass since we are empty nesters.

Our backup card is the Marriott card. Once we have maxed out on incentives for the airline card, we use the hotel card. That gives us some free nights out of the deal.

We will likely have to do some more analysis if they start tacking on more fees in order to use these reward cards.

[Volkov]

Well, I must caveat that I am a consultant and I am on the road during the week.

As such, I do earn a goodly amount of airline miles and hotel points, as well as Corporate Amex points that are mine to use.

So, I guess that's the reason I'm indifferent about using debit elsewhere.

[disneysteve]

We will likely have to do some more analysis if they start tacking on more fees in order to use these reward cards.

Same here. We earn $700-900/year in rewards from our cards typically. If the rewards go away or the fees rise, that will be a hit to our spending.

[snafu]

We've often negotiated lower prices for large purchases by offering to pay cash as opposed to CC. We got an extra $1,000. off the negotiated price of our latest car when I handed over a CC for the initial down payment...the credit manager offered the discount and I wrote a cheque instead. In many foreign countries retailers add 4% to the purchase price for CC fee. Interestingly, the vendor's actual fee is about 3% but they charge extra since travellers are considered too dumb to notice.

[JoshuaHeckathorn]

My comment was redirected more at folks outside this forum - how many people truly get something on their credit cards and pay it off immediately? In my personal experience, not very many.

More than you would think. According to the Fed's latest Survey of Consumer Finances released in 2009, only 46.1% of families using credit cards carried a balance. I suspect that number has increased a bit as of late, but the picture isn't as dreary as you might imagine. A lot of credit card users, including myself, always pay their balances in full.

We'll just have to wait until the next survey is released to see which group has the majority now.

[Volkov]

More than you would think. According to the Fed's latest Survey of Consumer Finances released in 2009, only 46.1% of families using credit cards carried a balance. I suspect that number has increased a bit as of late, but the picture isn't as dreary as you might imagine. A lot of credit card users, including myself, always pay their balances in full.

We'll just have to wait until the next survey is released to see which group has the majority now.

I'm curious about your usage of the term only in describing such a large section of the populace.

[JoshuaHeckathorn]

I'm curious about your usage of the term only in describing such a large section of the populace.

You said "not very many", and according to the Fed the majority do pay their balances in full. That's my only point. It's a common misconception that not very many people pay their credit card balances in full each month, and that's just not true.