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There are advantages to credit. For example, the money remains in your hands until you pay your credit card bill, so if there is a dispute, fraud, or overcharge

There are advantages to credit. For example, the money remains in your hands until you pay your credit card bill, so if there is a dispute, fraud, or overcharge, you don't have to fight and wait to get your money back. Also, some businesses, such as car rental companies, won't provide services to debit card holders. Also, it's a free [edit: zero-interest, not free] loan (if you pay credit card bills in full); you get some small marginal revenue from the money you keep for up to a month.

quicklime 3y ago
There are some benefits, but it does complicate the transaction significantly. It's no longer between two parties (a consumer and a merchant), there are now at least two more: a lender and a credit bureau. And that's why we're in this mess to begin with. Credit card transactions are reported to credit bureaus (from a quick web search, it looks like debit card transactions aren't) and this normalizes the idea that your financial data should be shared freely amongst finance companies. There's really no such thing as a free lunch, or a free loan. When someone offers you one, it's good to understand how you're going to be paying for it.
- wolverine876 3y ago
  Good points, especially the last one.
- louloulou 3y ago
  > It's no longer between two parties (a consumer and a merchant) A cash transaction is between 2 parties. A debit card transaction is between 5: consumer, consumer's bank, merchant, merchant's bank, payment network/card provider.
- wayfinder 3y ago
  Credit reporting makes getting loans easier because lenders are more willing to give loans when they can look up your credit rating instead playing it safe and declining you because they have nothing to judge the risk with. You also get fraud protection. It’s not free, but you’re not necessarily paying for it. The main concern is that some people are definitely paying for it disproportionally more than others.
  - etiennebausson 3y ago
    I would disagree, as things stand, getting a loan is easier if you have a good credit rating, but it is a deformation of the space. If there was no credit reporting, the lender would still need to loan just as much. They would base their decisions on other factors (down payment, wages, employ stability, assets, ...) rather than the extremely invasive credit rating.
deergomoo 3y ago
> Also, some businesses, such as car rental companies, won't provide services to debit card holders. In America, yes. Not really a thing in Europe, at least not in any places I’ve been to.
- KirillPanov 3y ago
  I've always wondered about this. You drive off with a EUR30k car. What do they do if you don't come back? Drain your bank account of 500 Euros? What then? In the US, the rental agreements let them keep charging you the daily rental fee until the amount collected exceeds the value of the car.
  - lxgr 3y ago
    Well, what do they do if you drive off with the car and they have your credit card? Your issuer is only liable for the few hundreds of dollars that the rental car company has authorized; beyond that, it's still their (or their insurance's) loss. The only practical difference is that you're not out that money on your checking account for a few days, which can indeed be inconvenient – but arguably that's not really the rental car agency's problem?
    - kccqzy 3y ago
      Couldn't the rental car company keep charging the card and the issuer remains liable for further amounts?
      - KirillPanov 3y ago
        Exactly this. The issuer can also sell that debt (daily rental up to car value) to a debt collector.
      - lxgr 3y ago
        Not if the issuer declines the authorization, and just closing the card (or even just temporarily locking it in the app for many cards!) would do that.
quesera 3y ago
> Also, some businesses, such as car rental companies, won't provide services to debit card holders. I think most debit cards, at least in the US, can also be authorized on the credit rails, and can therefore be used to rent cars. It's always worked for me.
- wolverine876 3y ago
  How does that work? Do you tell them it's a credit card?
  - jdofaz 3y ago
    Sometimes the terminal will ask Debit or Credit, sometimes it will just prompt for a PIN (meaning it wants to run it as debit) and you can just hit OK and it will run it as credit instead.
    - quesera 3y ago
      Annoyingly, Home Depot makes you press "Cancel" at the PIN prompt, and then it automatically runs it as credit. Of course if you do that anywhere else, you have to restart the flow.
- jdofaz 3y ago
  When I opened my checking account at Bank of America I was issued a ordinary debit card. After a couple years they replaced it with one with a Visa logo. I argued with them on the phone long enough to get them to replace it with an ordinary debit card. After than one expired they did the same thing and I gave up. I haven't seen a debit card from any bank without visa or mc in a long time.
magicalhippo 3y ago
> Also, some businesses, such as car rental companies, won't provide services to debit card holders. This almost ruined our vacation. I didn't have a drivers license and my SO didn't have a credit card. I've never had any issues renting cars here in Norway, both with credit and debit card, despite not being the driver. But not in the US, no no! Credit card had to be on the same name as the drivers license. And so we stood there, just having exited the plane, our two week vacation turning to dust in our minds as a car was most definitely needed. After some desperate attempts by us at finding a solution, the manager came by, having noticed the commotion. After some thinking she asked where we stayed. We had rented a place through Airbnb, which turned out to be the solution. Using the zip code from that place, she could register the debit card, and we finally got a rental.
nly 3y ago
In the UK you also get access to better consumer protection using credit thanks to Section 75

quicklime 3y ago

There are some benefits, but it does complicate the transaction significantly. It's no longer between two parties (a consumer and a merchant), there are now at least two more: a lender and a credit bureau. And that's why we're in this mess to begin with. Credit card transactions are reported to credit bureaus (from a quick web search, it looks like debit card transactions aren't) and this normalizes the idea that your financial data should be shared freely amongst finance companies. There's really no such thing as a free lunch, or a free loan. When someone offers you one, it's good to understand how you're going to be paying for it.

wolverine876 3y ago
Good points, especially the last one.
louloulou 3y ago
> It's no longer between two parties (a consumer and a merchant) A cash transaction is between 2 parties. A debit card transaction is between 5: consumer, consumer's bank, merchant, merchant's bank, payment network/card provider.
wayfinder 3y ago
Credit reporting makes getting loans easier because lenders are more willing to give loans when they can look up your credit rating instead playing it safe and declining you because they have nothing to judge the risk with. You also get fraud protection. It’s not free, but you’re not necessarily paying for it. The main concern is that some people are definitely paying for it disproportionally more than others.
- etiennebausson 3y ago
  I would disagree, as things stand, getting a loan is easier if you have a good credit rating, but it is a deformation of the space. If there was no credit reporting, the lender would still need to loan just as much. They would base their decisions on other factors (down payment, wages, employ stability, assets, ...) rather than the extremely invasive credit rating.

deergomoo 3y ago

> Also, some businesses, such as car rental companies, won't provide services to debit card holders. In America, yes. Not really a thing in Europe, at least not in any places I’ve been to.

KirillPanov 3y ago
I've always wondered about this. You drive off with a EUR30k car. What do they do if you don't come back? Drain your bank account of 500 Euros? What then? In the US, the rental agreements let them keep charging you the daily rental fee until the amount collected exceeds the value of the car.
- lxgr 3y ago
  Well, what do they do if you drive off with the car and they have your credit card? Your issuer is only liable for the few hundreds of dollars that the rental car company has authorized; beyond that, it's still their (or their insurance's) loss. The only practical difference is that you're not out that money on your checking account for a few days, which can indeed be inconvenient – but arguably that's not really the rental car agency's problem?
  - kccqzy 3y ago
    Couldn't the rental car company keep charging the card and the issuer remains liable for further amounts?
    - KirillPanov 3y ago
      Exactly this. The issuer can also sell that debt (daily rental up to car value) to a debt collector.
    - lxgr 3y ago
      Not if the issuer declines the authorization, and just closing the card (or even just temporarily locking it in the app for many cards!) would do that.

quesera 3y ago

> Also, some businesses, such as car rental companies, won't provide services to debit card holders. I think most debit cards, at least in the US, can also be authorized on the credit rails, and can therefore be used to rent cars. It's always worked for me.

wolverine876 3y ago
How does that work? Do you tell them it's a credit card?
- jdofaz 3y ago
  Sometimes the terminal will ask Debit or Credit, sometimes it will just prompt for a PIN (meaning it wants to run it as debit) and you can just hit OK and it will run it as credit instead.
  - quesera 3y ago
    Annoyingly, Home Depot makes you press "Cancel" at the PIN prompt, and then it automatically runs it as credit. Of course if you do that anywhere else, you have to restart the flow.
jdofaz 3y ago
When I opened my checking account at Bank of America I was issued a ordinary debit card. After a couple years they replaced it with one with a Visa logo. I argued with them on the phone long enough to get them to replace it with an ordinary debit card. After than one expired they did the same thing and I gave up. I haven't seen a debit card from any bank without visa or mc in a long time.

magicalhippo 3y ago

> Also, some businesses, such as car rental companies, won't provide services to debit card holders. This almost ruined our vacation. I didn't have a drivers license and my SO didn't have a credit card. I've never had any issues renting cars here in Norway, both with credit and debit card, despite not being the driver. But not in the US, no no! Credit card had to be on the same name as the drivers license. And so we stood there, just having exited the plane, our two week vacation turning to dust in our minds as a car was most definitely needed. After some desperate attempts by us at finding a solution, the manager came by, having noticed the commotion. After some thinking she asked where we stayed. We had rented a place through Airbnb, which turned out to be the solution. Using the zip code from that place, she could register the debit card, and we finally got a rental.

nly 3y ago

In the UK you also get access to better consumer protection using credit thanks to Section 75