Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I've never gotten a debit card, even though banks credit unions try (tried) to force them on you. Way too risky. What if we just used cash? I'm sure Visa/MC will come up with more gimmicks if cash actually caught on.
This is actually a great column for a local paper.
Since I pay my acounts off monthly, unless they have some special no interest offer, I have used a debit card only when it was necessary on a trip to Africa (and I was nervous about that). The protections against abuse are insufficient. If one can't control their spending, debit cards are better than credit cards, but the risk of fraud is too great for me. I have tried to provide my children with credit cards to establish a payment record to ensure future credit. Currently debit cards' risk exceeds benefit.
I have both but only use the debit card at atm’s for cash withdrawals and/or to move money from one account to another within the same bank. For me, the credit card offers more fraud protection benefits along with using the credit card to front money for purchase transactions which I then pay for when the monthly statement arrives. In addition, one can collect award points form credit card purchases which can either be taken in cash form, or in other offered items, once certain purchase levels are obtained.
I can’t understand why debit cards have gained their widely use that they have as credit cards, for me, offer the better value, benefits and protection over using, their cousin, the debit card.
I use my credit card and pay the balance of each month. I also use a debit card at merchants that only accept debit cards. My main grocery sore does not accept credit cards. Why not use cash? Frankly cash is a pain. I can pay with a debt card and get out of the store faster. No fishing through my wallet for bills and my pocket for coins. No change and bills to tuck away and remove from my pants in the evening.
Reply to @golub1: My, how times have changed. Before I get into the queue at the check-out, my money is handy, not still buried so that I have to go exploring for it. And what I fume about is the necessity to keep MACHINES happy. If a card will not scan properly, or if the machine is "slow" that day, according to the clerk, everyone gets held-up. And there is ALWAYS a glitch. I just LOVE shopping!!!!!!!!! (NOT!)
...And then there are the stupid gimmicks. There is a discount attached to using your loyalty card at that supermarket chain. I show it to them. Or if it is not with me, they'll be glad to let you punch in your phone number. In days gone by, they would be the ones to punch it in as you recite it to them, because they are employees, and this used to be thought of as "customer service." But today, I don't think they are capable of doing anything more than attempting to keep the machine happy. Customer service? What's THAT?......... So, OK. They scan my loyalty card.
Wow, I say. I get a discount with that card. I love it. Yes, she tells me, it's a good thing. Then I say: that dozen eggs was $2.49 before I gave you my card, but now it's $1.99. ...Why is that? Because you gave me your "Big Y" card. Oh...... But..... Tell me something, please: if Big Y can sell me those eggs for $1.99, why do I need a discount-card to get that price?
Yes, Marketing and advertizing are the cause of all the evils in the world. Hee Hee. Well, alright; not ALL.
I would love to have no debit cards. Unfortunately, many banks, it seems including all(?) internet banks, force a debit card on you if you want an ATM card. (Some brick and mortar banks will give you an ATM-only card if you ask.)
It seems debit cards don't offer as rich cash back "rewards" as do credit cards (2% with Fidelity Amex, 1.5% with Capital One Visa, 1.5-2% with Fidelity Visa, etc.).
For people who can't handle a credit card's credit line, a charge card (that must be paid off in full monthly) may be a good compromise. You get a credit card's protection and a short leash on your time to pay.
Regarding plastic security in general - the US banks shift fraud costs from their bottom line to their customers. By not adopting chip and pin security they save themselves (and merchants who would need hardware upgrades) some costs. They apparently think that eating the direct cost of fraudulent charges is cheaper. But as end users, we suffer the consequences - frozen accounts, time wasted dealing with the banks (notifying them of travel plans, having to approve any slightly unusual charge we make, informing them of fraudulent charges we catch), perhaps even paying some fraudulent charges that we miss catching.
If you have a chip in your card now, don't think that it supports chip and pin. If it came from a US bank, it doesn't. It still requires a signature, so it won't work in European ticket vending machines, or any automated system requiring a chip card.
For now, the best one can do is stick with credit cards, where the legal protections are stronger, and you're not stuck fighting to get your own cash back.
Debit cards were a failed attempt by the industry to move the 'freeloaders" (I suspect most people in this forum fall into this category) who pay off their bills each month and get a free float and transaction protection. Never mind that it is not free because processors get a cut out of each transaction. But it would be even more lucrative if they could get a cut out of each transaction, not have to extend a float and reach people even with poor credit. They made one major blunder in the design. They didn't offer the same level of protection and so adoption rate wasn't enough to establish it so they could force the freeloaders into it.
The debit cards are now doomed as a cash replacement because the proliferation of smart phones is making it possible for a lot of competing solutions to come up which will erode those transaction fees.
The current plan is to promote the use of prepaid credit cards for the same reasons that debit cards were introduced but undoing that blunder and providing the same protections. If the pre-paid cards take off, the days of freeloading with a free float will come to an end.
Reply to @msf: " By not adopting chip and pin security they save themselves (and merchants who would need hardware upgrades) some costs. They apparently think that eating the direct cost of fraudulent charges is cheaper. But as end users, we suffer the consequences - frozen accounts, time wasted dealing with the banks (notifying them of travel plans, having to approve any slightly unusual charge we make, informing them of fraudulent charges we catch), perhaps even paying some fraudulent charges that we miss catching."
This. Exactly this. ----
I thought Visa's Technology Program (TIP) was going to require upgrades, but it seems like that has been allowed to slide.
You also have new card programs like Amex's Bluebird, which I think are going to increase in popularity.
Interesting. I use primarily debit for cash withdrawals at the bank's own ATM, and also sparingly at just a few merchants I trust. No problems in well over 20 years of such use. One big advantage of debit cards is being able to take cash out along with a purchase if running low on cash. Also, I've found that credit cards tend to encourage excessive spending. It's much harder to fork over $$ out of your checking account (via debit card) at the time of purchase than to charge it to a credit card that may not come due for 30 or more days.
Credit cards are handy for travel. We put airfares, hotels, car rentals, meals, etc. on them - but pay the card off in full at each month's end with cash that has already been set aside for the travel. We have only one credit card (from a smaller bank we like and trust). No frills and no fees. We pass over the cards that offer air miles, rebates, etc. because we believe chasing after these perks would probably encourage us to spend beyond our means. Plus, the ones with perks seem usually to have annual fees.
Reply to @MaxBialystock: These "loyalty" cards cause me great angst. My read is they're collecting data about our buying habits they can use later for targeted advertising - or worse, can sell on the open market to ad agencies and other merchants. Maybe insurance companies? That, I suspect, is how they get their $$ back. I've noticed more and more of these gimmicks. Invariably the discount price is prominently displayed in large numbers, while the disclaimer that the loyalty card is required is barely noticeable. (I refuse to use these cards - out of belligerence I guess:-)
Recently, while in a local market I saw Yellowtail Shiraz, which the wife and I enjoy, with a big $5.99 shelf price displayed. Grabbed two bottles and headed for the checkout, but it rang up at $9.99 - an outrageous price for this cheap wine from the Outback. Got into a quarrel with the male clerk who saw no harm in my signing up for a locality card in order to get the discount. I told him I wasn't interested in having some big computer storing data on how much wine we purchase every week, what time of day we buy it, price we're willing to pay, and how we pay for it, all linked to our birth date, home address, phone number, and god knows what ever else personal information they've got stored about us and our shopping habits. Left him holding the two bottles. End of rant.
Personal tracking/loss of privacy is something I've been opposing for decades. My approach is similar but slightly different from yours.
I'm willing to use loyalty cards so long as there isn't personal information directly attached. Some stores will still hand these cards out without asking for any personal information. I'm fine with those. Many people lie on loyalty card applications. I'm conflicted about this practice, for what I think are obvious reasons.
I wrote "directly attached" personal information, because I still use credit cards. If stores are using credit card numbers to match identity with loyalty cards, the store would already be mining that personal data even without the loyalty card. Not quite as clean (i.e. accurate) as loyalty cards, but still very useful to them. My thinking is that if they're using credit cards to link this information, then the breach of my privacy is coming from the credit cards, not the pseudo-anonymous loyalty card.
Social security number is a different issue. Even if I didn't have privacy issues with its use, there's a fundamental problem with what it is used for. Years ago I read an article (likely on EPIC - Electronic Privacy Information Center) pointing out the absurdity of using the same number for security and for identification. The former requires secrecy, the latter widespread recognition. So I only provide my SSN to service providers who are legally required to collect and secure it - banks (but not credit card issuers), brokers, IRS, SSA, etc.
Reply to @msf: Which is why the industry would love to move freeloaders onto this. They have already cornered the rebate market for seeding. Gift cards and branded cards will be next.
They also make boatloads with the decay from the fees when unused for a while and the scrap change left unused in millions of cards.
The card my wife and I use exclusively is a Credit/Debit card from our Federal Credit Union. It is tied to our checking account which makes transactions easy to follow (my wife checks the account on the Internet often). We use it as a credit card for purchases and like hank, a debit card to withdraw cash at the ATM.
Frankly, I would never want to be without a debit card. It is no different than using an old fashion check book, only a whole lot more convenient.
Reply to @hank: Quite right, Hank. Being aware of all of that, I always just use a fictional name, address, birthday, phone, etc. If ---as happened only once--- they insist on matching it all against my driver's license--- I walk away. And machines, machines, machines. .....I lately went in for a scheduled oil change at a local garage where the family's been doing business forever. They want a name when I book the appt...OK. Jones. First name? John. ...I show up on time.... Hi. I've got an 8:00 oil change scheduled. OK. Name? Blah blah. ...We don't have you in our system. ... Let me just enter........ Excuse me, fella. I got a Jeep out here waiting for a simple, quick, standard oil change. Can we get that done? ...Sure, just a moment......He went out and copied the number of the effing INSPECTION STICKER, and sat back down to enter THAT! ..... Excuse me, fella. Where are those car keys? Right here, sir. OK. Thanks. Bye bye.
There is often confusion between an ATM card (processed by bank networks) and a debit card (processed by Visa/MC). Partly because the industry itself is trying to confuse.
ATM cards have been around for a long time and require a pin for use. You can still ask most banks and credit unions for an ATM card (have one from BoA). This will not have Visa or MC logo on it. Can be used at ATMs or POS terminals that participate in networks such as Cirrus, Plus, etc. This is a very good thing to have in addition to a credit card. But their existence may be threatened.
Debit cards tied to a bank account, and often not requiring a pin for use (processors ask you to tell the store to process it as a credit card to bypass pin check even though it is processed as a debit card) wherever you can use a credit card including on line purchases are a very bad idea. Lost or stolen cards can make money from your bank account disappear and unlike credit cards you have to fight to get your money back which may take time. Target shoppers that used credit cards are in a better shape than those that used debit cards in potential problems they may face. People with credit or self-discipline problems are better off with a pre-paid card where you can control how much is in it very easily and watch out for inactivity fees.
I have always kept an ATM card and two credit cards, (having just one can be a problem if your card needs to be replaced for some reason).
Comments
If one can't control their spending, debit cards are better than credit cards, but the risk of fraud is too great for me.
I have tried to provide my children with credit cards to establish a payment record to ensure future credit. Currently debit cards' risk exceeds benefit.
Debit cards are easy to get, but one have to watch it carefully. There is no free lunch in today's plastic money.
I can’t understand why debit cards have gained their widely use that they have as credit cards, for me, offer the better value, benefits and protection over using, their cousin, the debit card.
Old_Skeet
...And then there are the stupid gimmicks. There is a discount attached to using your loyalty card at that supermarket chain. I show it to them. Or if it is not with me, they'll be glad to let you punch in your phone number. In days gone by, they would be the ones to punch it in as you recite it to them, because they are employees, and this used to be thought of as "customer service." But today, I don't think they are capable of doing anything more than attempting to keep the machine happy. Customer service? What's THAT?......... So, OK. They scan my loyalty card.
Wow, I say. I get a discount with that card. I love it. Yes, she tells me, it's a good thing. Then I say: that dozen eggs was $2.49 before I gave you my card, but now it's $1.99. ...Why is that? Because you gave me your "Big Y" card. Oh...... But..... Tell me something, please: if Big Y can sell me those eggs for $1.99, why do I need a discount-card to get that price?
Yes, Marketing and advertizing are the cause of all the evils in the world. Hee Hee. Well, alright; not ALL.
Merry Christmas.
It seems debit cards don't offer as rich cash back "rewards" as do credit cards (2% with Fidelity Amex, 1.5% with Capital One Visa, 1.5-2% with Fidelity Visa, etc.).
For people who can't handle a credit card's credit line, a charge card (that must be paid off in full monthly) may be a good compromise. You get a credit card's protection and a short leash on your time to pay.
Regarding plastic security in general - the US banks shift fraud costs from their bottom line to their customers. By not adopting chip and pin security they save themselves (and merchants who would need hardware upgrades) some costs. They apparently think that eating the direct cost of fraudulent charges is cheaper. But as end users, we suffer the consequences - frozen accounts, time wasted dealing with the banks (notifying them of travel plans, having to approve any slightly unusual charge we make, informing them of fraudulent charges we catch), perhaps even paying some fraudulent charges that we miss catching.
If you have a chip in your card now, don't think that it supports chip and pin. If it came from a US bank, it doesn't. It still requires a signature, so it won't work in European ticket vending machines, or any automated system requiring a chip card.
For now, the best one can do is stick with credit cards, where the legal protections are stronger, and you're not stuck fighting to get your own cash back.
The debit cards are now doomed as a cash replacement because the proliferation of smart phones is making it possible for a lot of competing solutions to come up which will erode those transaction fees.
The current plan is to promote the use of prepaid credit cards for the same reasons that debit cards were introduced but undoing that blunder and providing the same protections. If the pre-paid cards take off, the days of freeloading with a free float will come to an end.
This. Exactly this.
----
I thought Visa's Technology Program (TIP) was going to require upgrades, but it seems like that has been allowed to slide.
You also have new card programs like Amex's Bluebird, which I think are going to increase in popularity.
Credit cards are handy for travel. We put airfares, hotels, car rentals, meals, etc. on them - but pay the card off in full at each month's end with cash that has already been set aside for the travel. We have only one credit card (from a smaller bank we like and trust). No frills and no fees. We pass over the cards that offer air miles, rebates, etc. because we believe chasing after these perks would probably encourage us to spend beyond our means. Plus, the ones with perks seem usually to have annual fees.
Recently, while in a local market I saw Yellowtail Shiraz, which the wife and I enjoy, with a big $5.99 shelf price displayed. Grabbed two bottles and headed for the checkout, but it rang up at $9.99 - an outrageous price for this cheap wine from the Outback. Got into a quarrel with the male clerk who saw no harm in my signing up for a locality card in order to get the discount. I told him I wasn't interested in having some big computer storing data on how much wine we purchase every week, what time of day we buy it, price we're willing to pay, and how we pay for it, all linked to our birth date, home address, phone number, and god knows what ever else personal information they've got stored about us and our shopping habits. Left him holding the two bottles.
I'm willing to use loyalty cards so long as there isn't personal information directly attached. Some stores will still hand these cards out without asking for any personal information. I'm fine with those. Many people lie on loyalty card applications. I'm conflicted about this practice, for what I think are obvious reasons.
I wrote "directly attached" personal information, because I still use credit cards. If stores are using credit card numbers to match identity with loyalty cards, the store would already be mining that personal data even without the loyalty card. Not quite as clean (i.e. accurate) as loyalty cards, but still very useful to them. My thinking is that if they're using credit cards to link this information, then the breach of my privacy is coming from the credit cards, not the pseudo-anonymous loyalty card.
Social security number is a different issue. Even if I didn't have privacy issues with its use, there's a fundamental problem with what it is used for. Years ago I read an article (likely on EPIC - Electronic Privacy Information Center) pointing out the absurdity of using the same number for security and for identification. The former requires secrecy, the latter widespread recognition. So I only provide my SSN to service providers who are legally required to collect and secure it - banks (but not credit card issuers), brokers, IRS, SSA, etc.
Traveler Cheques 2.0
You often pay a fee for the prepaid card, and it is the issuer, not you, that gets the free float.
They also make boatloads with the decay from the fees when unused for a while and the scrap change left unused in millions of cards.
Frankly, I would never want to be without a debit card. It is no different than using an old fashion check book, only a whole lot more convenient.
ATM cards have been around for a long time and require a pin for use. You can still ask most banks and credit unions for an ATM card (have one from BoA). This will not have Visa or MC logo on it. Can be used at ATMs or POS terminals that participate in networks such as Cirrus, Plus, etc. This is a very good thing to have in addition to a credit card. But their existence may be threatened.
Debit cards tied to a bank account, and often not requiring a pin for use (processors ask you to tell the store to process it as a credit card to bypass pin check even though it is processed as a debit card) wherever you can use a credit card including on line purchases are a very bad idea. Lost or stolen cards can make money from your bank account disappear and unlike credit cards you have to fight to get your money back which may take time. Target shoppers that used credit cards are in a better shape than those that used debit cards in potential problems they may face. People with credit or self-discipline problems are better off with a pre-paid card where you can control how much is in it very easily and watch out for inactivity fees.
I have always kept an ATM card and two credit cards, (having just one can be a problem if your card needs to be replaced for some reason).