3 ms·

You're cautious about debit cards? The only alternative being credit cards, where each transaction by definition is an overdraft? Maybe I'm getting this wrong,

by tinco 10y ago

You're cautious about debit cards? The only alternative being credit cards, where each transaction by definition is an overdraft? Maybe I'm getting this wrong, I'm from Europe where we don't really use credit cards. What fee are you talking about? If you use a debit card, and you don't have the money it will simply refuse the transaction right?

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computerphage 10y ago
No, they will charge you a fee called an overdraft fee for the "service" of allowing you to purchase the item. They basically extend you a small line of credit (there's some upper limit before they will deny the purchase) and then charge you, say, $35. Credit cards are always overdrawn in the sense that the bank has extended you a line of credit, but they don't have a fee associated with typical use.
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klodolph 10y ago
I think you are using the wrong definition of "overdraft". On a credit line, an "overdraft" is when you've already exhausted the line of credit. This is often possible, and there are often not really any fees or penalties associated with it. They are just giving you more credit than they originally promised to give you. American perspective here—I feel safer using a credit card because it's not my money. If someone fraudulently bills my credit card, it's the bank that they're stealing from, not me. There are legal protections in place which limit my personal liability. With a debit card, if someone fraudulently uses it, the money is gone and you have to fight to get it back. There are legal protections which limit my liability here too, but when I invoke those protections I'm starting from an inferior position (the money is already missing from my account), and those protections are a little better for credit cards. Our accounts are also often reconciled with ACH, which is not as fast as it could be. So it's not always true that the transaction will be refused if you don't have the money. It's often true, but credit cards are safer because there's not really a penalty for going over your line of credit.
- ansible 10y ago
  Yes, all this is also my perspective as a USA citizen. At the very least, I'd recommend that you have a separate debit card account that is used for store purchases and such. This gets filled (manually!) from another account which you also use only for really important stuff like utility payments, housing, car payments, etc.

by tinco 10y ago

deleted 10y ago

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computerphage 10y ago

No, they will charge you a fee called an overdraft fee for the "service" of allowing you to purchase the item. They basically extend you a small line of credit (there's some upper limit before they will deny the purchase) and then charge you, say, $35. Credit cards are always overdrawn in the sense that the bank has extended you a line of credit, but they don't have a fee associated with typical use.

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klodolph 10y ago

I think you are using the wrong definition of "overdraft". On a credit line, an "overdraft" is when you've already exhausted the line of credit. This is often possible, and there are often not really any fees or penalties associated with it. They are just giving you more credit than they originally promised to give you. American perspective here—I feel safer using a credit card because it's not my money. If someone fraudulently bills my credit card, it's the bank that they're stealing from, not me. There are legal protections in place which limit my personal liability. With a debit card, if someone fraudulently uses it, the money is gone and you have to fight to get it back. There are legal protections which limit my liability here too, but when I invoke those protections I'm starting from an inferior position (the money is already missing from my account), and those protections are a little better for credit cards. Our accounts are also often reconciled with ACH, which is not as fast as it could be. So it's not always true that the transaction will be refused if you don't have the money. It's often true, but credit cards are safer because there's not really a penalty for going over your line of credit.

ansible 10y ago
Yes, all this is also my perspective as a USA citizen. At the very least, I'd recommend that you have a separate debit card account that is used for store purchases and such. This gets filled (manually!) from another account which you also use only for really important stuff like utility payments, housing, car payments, etc.