Are Credit Card Rewards Worth the Risk?

[Eagle]

You all have your own opinions...and I have mine. I respect all of your feedback though, so thank you.

I stand corrected. My apologies.

[BuckyBadger]

Maybe I'm the only one bothered by this, but I don't like coming here and getting some other blog regurgitated to me. If I wanted to read the OP's blog I would read it wherever it is.

I don't come here for "cut and paste."

[Eagle]

Another question this thread got me thinking on... re: CC & risk: Regarding identity theft are credit cards more dangerous or less dangerous than debit cards?

[dczech09]

Another question this thread got me thinking on... re: CC & risk: Regarding identity theft are credit cards more dangerous or less dangerous than debit cards?

It all depends on the type of transaction with your debit card.

"Credit" transactions are run through the Visa or Mastercard systems and are subject to their rules and regulations. A "credit" transaction is just like a credit card transaction, so you would have zero liability assuming that it is a Visa or Mastercard debit card. Visa and Mastercard require member banks to assign the exact same protections in the events of theft and fraud.

"Debit" transations are a different animal. However, so few people use "debit" transactions as they don't even know their PIN. I don't know my PIN, for example, so I always use "credit" transactions with my debit card. The liklihood of a thief knowing someone's PIN is extremely low. But "debit" transaction liability is as follows under law:
- $0 if you report a stolen card right away and no fraudulent transactions were yet made
- $50 if you report the fraud within 2 business days of being posted
- $500 if you report the fraud after 2 buisness days, but within 60 of the billing statement with the fraudulent charges being available

After that, you are subject to $500 max liability, PLUS any fraudulent transactions outside of the 60 day billing statement grace period.

It is all convoluted, but only applies if a thief uses "debit" transactions on your card which means they would need to know your PIN.

The only "danger" that a debit card possesses that a credit card does not is sheer inconvenience. If someone steals and charges up your credit card, you lose some available credit for a short period of time. If someone steals and charges up your debit card, you lose cash money that was in your bank account for a short period of time. So from that standpoint, credit cards win.

Personally, I use debit cards but that is just me. I do not use credit cards and do not chase rewards out of integrity. I teach people to stay out of debt, so to me, using credit cards seems inconsistent. So I choose not to go there.

With that said, the OP's post was interesting but definitely duplicated from other sources. Not their original work.

[redtea]

I appreciate that you checked back in. I'm curious what your thoughts are on all of the responses. Do you think we are all wrong or delusional? Or can we agree that some people can use credit responsibly and others can't. I've often posted on this site advising certain people to get rid of their credit cards because they had demonstrated that they could not use them properly. For others, though, I've posted just the opposite and talked about maximizing rewards and such. It all depends on the individual. You just can't make a blanket statement that credit cards are bad and nobody should use them (like Dave Ramsey).

Actually no, I don't think anyone is wrong, per se. Yes, I believe some people are responsible with their budgets and what not so I completely agree with you there. However, I feel that it's becoming easier and easier for anyone to obtain a credit card, especially for those who DO NOT know how to use it wisely. So this is more or less the effects of what can happen when you're not smart about your expenses.

[disneysteve]

Actually no, I don't think anyone is wrong, per se. Yes, I believe some people are responsible with their budgets and what not so I completely agree with you there. However, I feel that it's becoming easier and easier for anyone to obtain a credit card, especially for those who DO NOT know how to use it wisely. So this is more or less the effects of what can happen when you're not smart about your expenses.

Fair enough. I agree with you there. I think a big part of the problem is that young people aren't being taught to properly handle credit, or money in general, because most of their parents don't know how to do it right either. There are personal finance classes in school but most kids blow them off or are just more likely to do what they see their parents doing rather than what the teacher said.