7 ms·
Idea of credit cards still puzzles me.
by nxzero 10y ago
Idea of credit cards still puzzles me.
- op00to 10y agoThe idea of carrying around cash for every transaction puzzles me. I pay almost exclusively with credit. I get a push notification to my phone for every transaction. At the end of the month, I get a nice CSV file with all my transactions for analysis and budgeting. I get a 1-3% rebate on all my purchases. If my card is lost or stolen, I hold no liability. With cash, the liability is all mine. I hate using cash, and only use it when I must.
- Artemis2 10y agoAnd compared to a debit card? You have all the advantages you listed (except the rebate), but you're spending your own money.
- dingo_bat 10y agoThe problem with debit is that the money is immediately gone. In the case of a dispute, it takes a long time to get the money back.
- beisner 10y agoRight on the money. In the US at least, there are a ton of laws and protections for consumers when it comes to disputing charges and credit card fraud in general. It is much harder to do this with debit.
- kstenerud 10y agoAnd building no credit rating.
- gpvos 10y agoThis also puzzles me. Paying directly should inspire more trust than taking out credit and paying it off a few weeks later.
- rizwank 10y agoIt's a reality in the states. But, yes, it's weird. We model credit worthiness largely on past payments of credit; which means that we are incented to use the system. I don't see using my credit card as really "using credit." I use it as a charge card and pay every bill as it comes; so it's merely a (30-59 day) float. I, of course, have a difference financial capability than much of the US, and recognize that privilege. For many people, CC float is what let's them live paycheck to paycheck and is the first brick in Americans penchant for debt. That being said; there is a huge benefit to many consumers having a short term credit facility. It's as if the CC industry made a micro loans initiative. (And then proceeded to abuse it).
- jasonkostempski 10y agoMaking it even easier to keep yourself out of debt, at least until you fall for one of those payday loan scams.
- op00to 10y agoDebt isn't bad. I recently purchased a car. Given my credit, I was offered 1.8% financing with first months interest paid for. If I took it, they would throw in a bunch of perks like lifetime oil changes, loaner cars for repairs, etc. I did, drove home, immediately paid off the loan, and continue to enjoy the benefits. No worrying about bank checks or cash or whatever. Credit makes my life so much easier. Credit and even debt is not the problem - it's living beyond your means.
- kstenerud 10y agoWhat I did was take the money I would have used to pay the car off, and instead put it into a term deposit for the same duration as the loan payments, thus earning myself a couple percent above the loan rate with no risk.
- philliphaydon 10y agoDebit cards are not accepted everywhere. Countless online transactions won't accept visa/Mastercard debit cards.
- alkonaut 10y agoHave had only debit for 20years and never used credit. I have not seen a single transaction rejected because the visa/MC debit cards weren't credit cards. Either they aren't countless or they must be focused to a few countries.
- op00to 10y agoAnd what happens when someone snarfs your number and clears your bank account out? How do you pay the rent? With credit, it's the banks money that gets stolen, and they worry about getting it back, not me.
- alkonaut 10y ago> With credit, it's the banks money that gets stolen Regardless of debit or credit the CC company always has responsibility if there is fraud. With debit I might risk having an empty account for a longer period of time after an incident though (Refunds might take a while). > How do you pay the rent? I'd use credit.
- cmurf 10y agohttps://www.consumer.ftc.gov/articles/0213-lost-or-stolen-credit-atm-and-debit-cards https://www.consumer.ftc.gov/articles/0213-lost-or-stolen-cr... For consumers, credit vs debit is in theory about the same, in practice it's slightly different. The main difference though is consumer vs business. A business debit card attached to a checking account, is the same problem with fraud as the checking account itself, the burden is almost entirely on the business not the bank.
- dorfsmay 10y agoYou cannot use debit for web transactions nor when in a different country.
- izacus 10y agoEven USA ATMs and POS terminals happily accepted my european Maestro debit card, so that's not really true.
- alkonaut 10y agoFalse and false. Used visa and mc debit cards exclusively for 20 years all over the world and online. You must be speaking of something different such as "Visa electron" debit cards.
- dorfsmay 10y agoI'm talking about Interac cards, which is what we usually mean when talking about debit cards in Canada: http://interac.ca http://interac.ca
- Sgt_Apone 10y agoMost banks have Visa or MC debit cards available now. You can use them online for most things, but at a PoS it defaults back to the Interac network.
- forgetsusername 10y ago>but you're spending your own money How is spending your own cash an advantage over spending someone else's?
- needusername 10y ago> I get a push notification to my phone for every transaction. No you don't. You only get it for online authorizations.
- germanier 10y agoWhich nowadays is the large majority of transactions.
- needusername 10y agoActually NFC transactions below a certain limit are usually offline authorized.
- germanier 10y agoOk, that can be different elsewhere but my experience with German cards in some European countries is that contactless payments are almost always online authorized even if no cardholder verification is required.
- needusername 10y agoYou can do cardholder verification offline with PIN.
- rizwank 10y agoMany banks offer notifications for offline transactions too. I get an SMS for every charge.
- germanier 10y agoI suppose they meant "authorized by your bank at time of purchase" and not "done on a website". The former is for example not done if the merchant uses one of those old imprinter machines. There is no way a bank can send an SMS when they don't know of the transaction.
- gpvos 10y agoThe idea of a rebate puzzles me. I'd rather pay less up front. A rebate gives me the idea something sleazy is going on.
- rizwank 10y agoHidden externality. Retailers eat the cost in order to get the customers. Cc processors earn the cost. Banks, in order to get customers, pass some of the dough back to consumers in marketing and rewards. So it's somewhat fairer now than it was ten years ago with similar fees but less rewards. But an economist would say that optimal would be to massively reduce fees and take away rewards.
- Silhouette 10y agoThe thing is, all of those benefits to you come with hidden costs. Those costs will almost universally be dumped on the merchants, because the large payment services take advantage of their dominant position to set horribly one-sided terms. In practice, that means you're paying more to the merchant, possibly quite a lot more in some cases. That 1-3% rebate is going to translate quite directly into a 1-3% increase in sticker price. That lack of liability if your card is lost or stolen is essentially a mandatory insurance scheme with everyone paying a premium on sticker price to fund it. It's really no different to, say, all those offers to buy something on-line but then return it for a full refund if you don't like it. In industries like clothing, a significant fraction of customers will abuse this by doing things like buying some nice clothes, actually wearing them once or twice, and then trying to return them. Often the return will be accepted even though the merchant knows very well that the clothes have actually been worn and they can't restock them, because it's too much trouble to argue the point. The bottom line is that if you're that abusive customer then the refund deal is great for you, but everyone else is paying higher prices for your clothes to cover the merchant's wastage due to abuse. Of course there are other advantages to digital payment in terms of keeping records of what you spent (and potential disadvantages in terms of privacy if others have access to those same records) but to me that's a separate issue to the direct financial implications of paying by different methods.