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Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
by aynyc 5y ago
Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
- oblio 5y agoCredit history isn't a thing in many countries and credit card rewards are often minimal. Do what makes sense in your country.
- greenyoda 5y agoGood advice, but only if you pay off your balance in full every month to avoid the huge interest charges.
- wetpaws 5y agoWhy in the world wouldn't you want to do it.
- DJBunnies 5y agoCan <> want.
- iratewizard 5y agoWith or without a credit card it's still spending what you don't have. The credit card just makes it easier to ignore the fact that you're in dire financial straights.
- reaperducer 5y agoSounds like you've never had a car break down. Or a relative get hurt on the other side of the country. Or been seriously ill. Or unemployed. Or had a major appliance break. Or a million other things that happen to people every single day.
- oneplane 5y agoPretty much all of that is handled by the social safety that the government is there for or by your own savings that you build up because you are an adult and look ahead to make sure you can deal with such events. One of those things is planning and specifically financial planning.
- c22 5y agoA full quarter of adults in the US have no savings at all. It can be hard to build up your reserves when more than half the money you make from your two jobs goes to rent. Did I mention those jobs are both "part time" so no benefits either.
- wetpaws 5y agoThe discussion was about debit card vs credit card, not about the credit.
- just-ok 5y agoHow does this change with a debit card?
- Lammy 5y agoMy credit score goes down unless I carry some revolving balance.
- Spooky23 5y agoNo, that’s not how it works.
- tata71 5y agoUsing a very, very low, or no percentage of your available credit for ages makes you just as bad of an investment for these companies as customers who run off on the bill. In both cases, higher risk of default, less chance of profiting from interest, lower creditworthiness score!
- singlow 5y agoI have never once carried a credit card balance or paid a cent in interest. My credit score is over 800 which is pretty much maxed out. The only things on my credit history are a few credit cards that I got to establish credit history, and my mortgage, which is why I needed a credit history. So I got 3 credit cards and used them each during each month so that I would established on-time payments on all three and boom, I had perfect credit after a couple years and qualified for a mortgage. I didn't use any credit before I decided to buy a house in my 30s so I had a completely empty credit history prior to that, apart from a library that reported a lost book. So it just took a little while to get my average account age up and my number of on-time payments above some threshold. Now if you don't use the card at all, it is less effective at establishing credit because you don't get the on-time payment history or balance. The credit bureaus just get reports of on-time or late payments, balances, and delinquencies/defaults, etc. You will be given the best rating at a small non-zero percentage of your total available credit being used each month, but it doesn't have to be carried. All you have to do is make sure you don't pay it off too early. Just wait until the due date, and pay off the statement balance, not the full balance. If you pay it off mid-month, before the end of the statement, or paid the full balance instead of what is due, you may get a zero balance reported which is a slight temporary hit to your score, but not that significant. I found that it was best to have a few cards with a total available credit at least 5 times my monthly spending. That way the reported balance ends up being <20% of my total available credit which is near the sweet spot. If I am going to do a refi on my house i might try to micromanage it to somewhere close to 5% for a few months ahead of time and get a few points added to my score, but once you get your score up around 800 it doesn't really matter if it is up or down 10pts or so. I found that as my average account age increased, the swings from slight differences in balance were smaller.
- smabie 5y agoYou can earn higher interest than the APR on your cc by yield farming stablecoin pools
- wmf 5y agoPlease don't do this; it's really dangerous.
- CuriousCosmic 5y agoThat... is a terrible idea for literally every reason.
- throwaway98797 5y agoI would but tax implications scare me.
- kingcharles 5y agoAbsolutely, but there are so many people in the USA that are excluded from the ability to obtain a credit card - even a secured one - that debit cards are a god send to us. Both Cash App and Venmo sent me debit cards without requiring any ID.
- toomuchtodo 5y agoEven though you didn’t provide ID, I assume you provided a name, address, and other info they could use to perform KYC (Know your customer), no?
- TingPing 5y agoName and address, yes. Kinda needed to send a card anyway.
- tasogare 5y agoWhat? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house.
- JadeNB 5y ago> What? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house. Using credit in this sense means using a credit card, not necessarily running up a debt in anything other than a nominal sense. Using a credit card and paying off your balance in full every month (so that no fees are assessed) is way better for later loanworthiness and similar credit-based evaluations than using a debit card.
- chrisseaton 5y agoWhy spend your own money when someone is willing to loan you money for free, will give you some of your money back, and will also protect you against consumer issues? You’re leaving money and protection on the table by not using them.
- xdennis 5y agoBecause when you spend someone else's money you still have to pay it back... sometimes more. A bank is a lot smarter than me. It wouldn't want me to use credit cards if it were in my advantage.
- chrisseaton 5y agoYou have to pay it back… one month later. You can keep your own money safe and invested until then. And you don’t have to pay any more if you pay it on time. The bank wants you to use credit because they get paid by the merchant every time you do.
- postingawayonhn 5y ago> You have to pay it back… one month later. You can keep your own money safe and invested until then. But if you're doing this every month then the advantage is what? ~$3k invested somewhere? It's not worth the extra effort for me.
- reaperducer 5y agoAre there American banks that don't cover debit transactions with the same guarantees as credit card transactions? I've had two debit cards from two different large banks skimmed in the last five years, and both times the banks took care of it instantly. I think the whole "no coverage if you use debit" notion is many years out of date.
- chrisseaton 5y agoWith a debit card you’re relying on the bank’s good will. With a credit card it’s the law. Also with credit you can dispute it before you pay it. With debit you’re trying to fix it up after your paid it.
- oneplane 5y agoIt's almost as if the law is setup to let people make bad choices with money they don't actually have so that some value can be extracted from them later.
- maccolgan 5y agoLike it or not protecting people costs money, with credit cards banks have an opportunity to potentially recoup that, otherwise they don't do that at all or only do it when they can afford it.
- jjav 5y ago> With a debit card you’re relying on the bank’s good will. With a credit card it’s the law. Can't emphasize this enough! It is true that many banks do offer fraud protections on their debit cards. But those are just a choice by the bank. They can at any moment stop or withdraw those protections and then you're out of luck. With a credit card, the protections are written into regulation, so every bank must follow them and can't change the terms.
- mb7733 5y agoEven if things are taken care of in the end, with debit fraud the money leaves your bank account immediately and then it is up to you to make sure you get it back. With credit card fraud it won't get to the point -- you dispute the charges before paying them back.
- p2t2p 5y agoAustralian here. Don’t use credit card, setup a separate account for bills, direct debit everything from there, don’t keep anything big on your debit card and use it with Apple Pay everywhere. No fraud, no fees, no complex things and rules to remember.
- smabie 5y agoWhy would you ever not want to put something on a cc? It's quite literally free money (rewards/points + you can delay payments for a month and pay no interest)
- starwind 5y agoI can't speak for Australia specifically, but most EU countries sharply cap the interchange fees that credit card companies can charge so they don't really have rewards to speak of
- oneplane 5y agoThere is no free money, and delaying is essentially spending money you don't actually have. If you want to buy something that comes out of your short-term savings account here. Or you can choose to not do that and have all your money in one single account and everything you do goes in and out of that. And you can configure it in a way that disables going negative so you don't get this weird overdraft fee system unless you choose to.
- markdown 5y agoIn my country, merchants add a 2.5% fee to every credit card transaction. Cash is king.
- ikr678 5y agoAustralian here - Points systems are only really worth it in Aus if you're collecting frequent flyer related ones. There are not as many cash-back rewards as the US. We have had a universal fee free bill payment system called Bpay for 20+ years, and paying via cc usually incurs a minor fee. So most households will direct Bpay household bills rather than via credit card. I don't fly much, so I dont feel the need to harvest points. I dont want my purchasing data picked up by any more companies than necessary (my bank & the vendor), and all the various chargeback and refund facilities offered by credit card companies are a bit less critical as Australia already has stronger consumer protection law around goods fit for purpose & refunds. Credit scores are not really a thing in Australia either, you are assessed on your current ability to service a loan rather your history. Defaults still show up & count against you, but 'building good credit' is again an American concept. Credit cards are a product designed largely for the American market.
- just-ok 5y agoOne of the biggest wins from credit cards (imo, of course) is reward programs. Getting a 1-3% discount on purchases is pretty nice (plus, obviously, fraud protection, etc.). However, some issuers are using crypto to claw back at this perk; for example, the Coinbase debit card can give you 4% back.
- nightski 5y agoThe Coinbase card ties up your assets (you have to hold USD or crypto on their platform). Whereas the credit card is an interest free loan for the statement period. I'd take the latter any day of the week.
- reducesuffering 5y agoBank account savings interest rates are like 0.40% annual, 0.03% monthly. I'd take an extra 1% cash back over a loan that accrued me only 0.03%.
- Nursie 5y agoI find it hilarious that Americans will tell you about the great discount/cashback they get, then in the next post crypto advocates will tell you that crypto currency can avoid the insane credit card fees. It's almost like the two things are related, but few people seem to link them... In Europe and Australia, caps have largely fixed the latter, at the expense of the former. Seems better all around.
- barsonme 5y agoInsane credit card fees? What? Most cards do not have a fee. And for those that do, it’s very easy to recoup much more than the fee in rewards. For example, Chase Sapphire is one of (or actually the) the most expensive cards at $550/year. But even then it’s very easy to recoup much more in rewards.
- avianlyric 5y agoThey’re talking about interchange fees you pay on every transaction. Which is where the money to fund rewards comes from. In the US you’ll be paying something like 1% on interchanges fees for every transaction, in the EU it’s something like 0.05%. Orders of magnitude less, thus orders of magnitude less rewards, and also fraud, because banks can’t use the interchange to write off fraud and thus implement proper controls.
- cloudbonsai 5y agoTo be fair, debit card offers a few advantages over credit card: * Debit card allows to set granular spending limit (e.g. $100 per day). So you can protect the potential amount that a fraudster can spend with your card. * You can set it up to send transaction details via email on every purchase. This is a lot more convenient than, say, checking the credit card statement at the end of every month. I actually prefer using debit cards for daily expenses. For me, credit card is almost exclusively for online purchases.
- CrazyStat 5y agoNeither my debit nor credit card allows the first, as far as I know, and both allow the second. Perhaps these are advantages of the particular debit card you have over the particular credit card you have. I don't think they are general.
- zippergz 5y agoMy credit cards (multiple issuers) all send me emails for every transaction.
- nunez 5y agoyou can get email alerts on cc transactions i have alerts sent to me for anything higher than a cent
- jjav 5y agoYou can set up email alerts on every transaction for credits cards in many banks. Probably not all. On the fraudsters, with credit cards the limit you'll be liable is generally $0 ($50 in rare cases), by law (regulation).
- simonbarker87 5y agoThis is a strong US vs the rest of the world difference. In the UK for example most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” (Americans just seem to have a lot more money sloshing around compared to even well paid Brits and Europeans) it’s much harder to manage that monthly offset from salary payment to credit card falling due and when the rewards are so paltry it’s just nit worth the faff. Only one of my friends does any regular spending on a credit card and he says “it’s Amex so it’s worth the extra faff but only just”
- barsonme 5y ago> most people will do their day to day spending on debit because the rewards we get aren’t worth the faff of paying for things a month later, when you are less “flush” This sort of thinking misses the point that even with credit cards you don’t spend what you don’t have. You (ideally) treat it like a debit card. If I spend $100, then I’ve $100 less in my checking. If you do that, then “flush” never enters the equation.
- simonbarker87 5y agoPoor choice of word on my part I think. I don’t mean flush in that the following month you have more money but that in general Americans have more money and so are less susceptible to the ramifications of miscalculating. I’ve had a couple of long conversations with Americans about this topic of credit vs debit and the cultural difference is so strong that we inevitably can’t reconcile each others point of view. My debit card will bounce any payment that will take me over drawn, my credit card doesn’t care if I can’t pay it off next month and that’s what the banks hope you forget.
- xdennis 5y agoThe possibility of spending more money than you have means you are more likely to spend more than you have
- simonbarker87 5y ago