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What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? To me a credit card always feels "dirtier" because of t

What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible.

bluejay2 5y ago
Many credits card have points/airline miles/other stuff you can earn with your purchases. So as long as (1) the bill doesn't add fees for using a credit card, and (2) you are paying your credit card balance in full each month (and thus incurring no interest charges), it can be more advantageous to pay with a credit card. Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future.
- feanaro 5y ago
  > Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future. Ah, that explains part of it, I guess. This isn't a thing in my European country. What I don't understand is why simply using a credit card would count more towards establishing you as a good creditor than not even having to use a credit card at all. I guess that's a weird bias in the system?
  - lotsofpulp 5y ago
    It is not a weird bias. Paying off a revolving credit card balance every month is not that big of a signal about your future likelihood of repaying loans in a timely manner, but it is a signal. Not borrowing any money, and hence not having any history of repaying borrowed money is zero signal. If it was true that people who never borrowed money were more likely than repaying borrowed money on time than people who regularly borrowed money, then a lender would have already noticed this in their data and would have offered a more competitive financing product in the marketplace. Since that has not happened, it is reasonable to surmise that the tiny signal of maintaining a small revolving credit card loan with timely payments is better than the zero signal of not maintaining any loan balance. Note that having many tiny credit card revolving loan amounts is viewed negatively.
matwood 5y ago
> What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? As long as interest is avoided, rewards and protection. I end up with a 'free' plane ticket to Europe every year through my primary CC. The Apple Card gives 3% back on anything Apple (plus some others like TMO), and allows you buy almost any Apple item with 12 month, 0% payments. I could spend the 2k on that laptop or keep that money invested and just pay 166/month. The Amazon card is 5% back on anything Amazon (and Whole foods if that's your thing). I bought a 'free' TV with the rewards last year. I've had my CCs stolen many times, and the buffer means I've never had that money leave my bank account. I was taught early on in life that cash is king. The longer you can keep the cash in your control the better. Using CCs to provide a buffer does exactly that. And the rewards are a bonus for money I'm spending anyway.
lotsofpulp 5y ago
> To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible. In the US, you lose out on 2%+ cash back rewards when you do not use credit card (because the price for purchasing with a credit card is the same as not using a credit card, and the minimum cash back rewards in free credit cards is 2%).
- feanaro 5y ago
  Why does cash back exist as a concept? How does it benefit companies to charge me less simply for the act of using a credit card, even if I'm not paying interest on it?
  - lotsofpulp 5y ago
    The entities giving cash back (banks issuing credit cards) profit more from the interest from people who do not pay their monthly balance more than the loss of giving everyone 2% cash back. Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. There are some notable exceptions that offer cheaper prices for using debit card, such as Target that offers a 5% discount for using a debit card to pay. Hence I pay at Target with a debit card. Basically, other people’s cash flow problems and/or inability to resist temptations to spend more than what they have results in profit for merchants, banks, and people that pay their credit card balance every month.
    - ChrisMarshallNY 5y ago
      > Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. Also, I assume that most credit companies (VISA, MC, etc.), have rules, expressly forbidding charging different rates for the use of credit cards. It makes sense, because they don't want to be avoided as a payment option. I learned this, when I did my first shopping cart, and read the whole freakin' VISA Merchant's Manual. There was some kind of loophole that gas stations used.

bluejay2 5y ago

Many credits card have points/airline miles/other stuff you can earn with your purchases. So as long as (1) the bill doesn't add fees for using a credit card, and (2) you are paying your credit card balance in full each month (and thus incurring no interest charges), it can be more advantageous to pay with a credit card. Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future.

feanaro 5y ago
> Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future. Ah, that explains part of it, I guess. This isn't a thing in my European country. What I don't understand is why simply using a credit card would count more towards establishing you as a good creditor than not even having to use a credit card at all. I guess that's a weird bias in the system?
- lotsofpulp 5y ago
  It is not a weird bias. Paying off a revolving credit card balance every month is not that big of a signal about your future likelihood of repaying loans in a timely manner, but it is a signal. Not borrowing any money, and hence not having any history of repaying borrowed money is zero signal. If it was true that people who never borrowed money were more likely than repaying borrowed money on time than people who regularly borrowed money, then a lender would have already noticed this in their data and would have offered a more competitive financing product in the marketplace. Since that has not happened, it is reasonable to surmise that the tiny signal of maintaining a small revolving credit card loan with timely payments is better than the zero signal of not maintaining any loan balance. Note that having many tiny credit card revolving loan amounts is viewed negatively.

matwood 5y ago

> What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? As long as interest is avoided, rewards and protection. I end up with a 'free' plane ticket to Europe every year through my primary CC. The Apple Card gives 3% back on anything Apple (plus some others like TMO), and allows you buy almost any Apple item with 12 month, 0% payments. I could spend the 2k on that laptop or keep that money invested and just pay 166/month. The Amazon card is 5% back on anything Amazon (and Whole foods if that's your thing). I bought a 'free' TV with the rewards last year. I've had my CCs stolen many times, and the buffer means I've never had that money leave my bank account. I was taught early on in life that cash is king. The longer you can keep the cash in your control the better. Using CCs to provide a buffer does exactly that. And the rewards are a bonus for money I'm spending anyway.

lotsofpulp 5y ago

> To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible. In the US, you lose out on 2%+ cash back rewards when you do not use credit card (because the price for purchasing with a credit card is the same as not using a credit card, and the minimum cash back rewards in free credit cards is 2%).

feanaro 5y ago
Why does cash back exist as a concept? How does it benefit companies to charge me less simply for the act of using a credit card, even if I'm not paying interest on it?
- lotsofpulp 5y ago
  The entities giving cash back (banks issuing credit cards) profit more from the interest from people who do not pay their monthly balance more than the loss of giving everyone 2% cash back. Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. There are some notable exceptions that offer cheaper prices for using debit card, such as Target that offers a 5% discount for using a debit card to pay. Hence I pay at Target with a debit card. Basically, other people’s cash flow problems and/or inability to resist temptations to spend more than what they have results in profit for merchants, banks, and people that pay their credit card balance every month.
  - ChrisMarshallNY 5y ago
    > Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. Also, I assume that most credit companies (VISA, MC, etc.), have rules, expressly forbidding charging different rates for the use of credit cards. It makes sense, because they don't want to be avoided as a payment option. I learned this, when I did my first shopping cart, and read the whole freakin' VISA Merchant's Manual. There was some kind of loophole that gas stations used.