Using DEBIT vs CREDIT

  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 3:55 PM GMT
    Is there a PRO and CON on using one over the other for purchases? I have both on one card and both are limited to whatever is in my actual checking account....still not sure what the advantages are for me to pick credit or debit. Anyone? icon_cool.gif
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 3:59 PM GMT
    On debit you can sign a waiver so your spending habits are NOT tracked. Good luck with that on a credit card. icon_wink.gif
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 4:04 PM GMT
    Credit = earn points/rebates/etc; fraud safechecks

    As long as you spend/act responsibly, using credit will always trump using cash or debit
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 4:56 PM GMT
    atl2atx85 saidCredit = earn points/rebates/etc; fraud safechecks
    As long as you spend/act responsibly, using credit will always trump using cash or debit

    Definitely. Lack of fraud protection is the biggest negative for me. Plus if your checking and savings accounts are linked together for overdraft protection. A thief can easily wipe out both accounts.
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 5:31 PM GMT
    Fraud protection works on most debit cards too. If there are "points" and "incentives" it's because the bank charges the merchant more for you to use that card. They're bribing you with a tenth of a cent or something to gouge the merchant anywhere from a quarter to three dollars for the "extra risk" of accepting credit. Even when it's not actually credit.
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 6:04 PM GMT
    the type of incentive program doesn't dictate the merchant's cost to accept; it's the type of card (as in visa vs amex vs mc). Amex has always been more expensive for merchants to accept, which is why they're accepted in far fewer places. However, using your 5% reward Visa as opposed to your 1% cash back Visa won't matter to the merchant.
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 10:35 PM GMT
    Wrong. I get detailed statements on this stuff every month. There are all kinds of fee schedules within each card program. There are higher fees for credit cards than for debit cards. The fee for a signature transaction is higher than for a PIN transaction. Corporate cards are more than consumer cards. etc. etc. etc. The incentive programs are a way to get the consumers to use the card transactions with the highest fee to the merchant.

    And I recently got a letter from the card processing company saying that they're boosting per-charge rates again because of new VISA incentive programs.
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 11:17 PM GMT
    When you pay by credit card, the merchant must pay a percentage of the total sale to the credit card company; with debit the merchant pays a flat fee.

    The more people pay by credit card, the more of the merchant's profit goes to the bank - so he eventually will have to raise prices accordingly.

    The more people pay by debit, the more the merchant gets to keep that percentage as the legitimate profit to cover overhead and make a living.

    So paying by debit benefits the merchant more directly but indirectly benefits the consumer in lower prices to make the same margin.

    If you pay off your credit balance in full every month it might be to your benefit to use your credit card, but not if you do not pay it off. This start accumulating interest on top of whatever you paid for the product.

    Also be aware that when buying things like electronics with some credit cards, you have immediate insurance on whatever product you buy if it get lost,damaged or stolen on the way home from the store, and with all you have the protection of time to dispute charges.



    Iti s iportant to READ your cardolder agreement and be sure you understand there are different types of charges subject to different interest and how your payment is applied.

    eg.

    If you have a cash advance on your card AND an outstanding balance your payment is applied first to interest, then to purchases, and lastly (only once all the charges are paid) applied to the cash advance - which is clocking interest at the the highest rate.


    this is the credit card trap. As soon as you take a cash advance , if you do not pay off your entire balance soon you are well on the road to never getting out.