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> I think perhaps you don't understand because you presumably have a reasonable amount of money and cashflow buffer. Agreed. > debit cards are still very popu
by jjav 3y ago
> I think perhaps you don't understand because you presumably have a reasonable amount of money and cashflow buffer.
Agreed.
> debit cards are still very popular for people who need to control every dollar,
But that's terrible advice. Debit cards will debit immediately from your account and you may know that banks are very creative in re-ordering transactions to inflict you maximum pain.
You have $1000 balance and on the same day issue payments for $10, $20, $30, $40, $50 and $999. If the bank processes those in the same order you get hit with one overdraft fee when the final $999 payment goes through.
But no, the bank will rearrange that to process $999 first, and hit you with five overdraft fees. So nice of them. I mean nice for them.
With a credit card the payments are buffered away from your balance and you can choose when to pay it.
- nobody9999 3y ago>But that's terrible advice. Debit cards will debit immediately from your account and you may know that banks are very creative in re-ordering transactions to inflict you maximum pain. >You have $1000 balance and on the same day issue payments for $10, $20, $30, $40, $50 and $999. If the bank processes those in the same order you get hit with one overdraft fee when the final $999 payment goes through. >But no, the bank will rearrange that to process $999 first, and hit you with five overdraft fees. So nice of them. I mean nice for them. According to[0/PDF] the Consumer Financial Protection Bureau (CFPB)[1], reordering transactions in that way is illegal. [0] https://files.consumerfinance.gov/f/documents/cfpb_unanticipated-overdraft-fee-assessment-practices_circular_2022-10.pdf https://files.consumerfinance.gov/f/documents/cfpb_unanticip... [1] N.B.: The CFPB is a US Government agency. Edit: I'd clarify that I am not claiming that this sort of transaction doesn't happen, but rather that it's not a new issue and happens often enough that the CFPB felt it important enough to publicly opine about its illegality several years ago. Additional Edit: Added more context from parent comment to make their point (to which I certainly wasn't in disagreement) clearer. Apologies for any confusion.
- PH95VuimJjqBqy 3y ago> Debit cards will debit immediately from your account and you may know that banks are very creative in re-ordering transactions to inflict you maximum pain. In the US that's been illegal since the late 90's, you need to update your information.
- jjav 3y ago> In the US that's been illegal since the late 90's, you need to update your information. And yet, it happens.
- PH95VuimJjqBqy 3y agoevidence please.
- jjav 3y agoHere's one article from 2014, much later than the 90s: https://www.cbsnews.com/news/nearly-half-of-banks-still-reorder-checks-boosting-overdraft-fees/ https://www.cbsnews.com/news/nearly-half-of-banks-still-reor...
- PH95VuimJjqBqy 3y agoThe practice is illegal, do your research. Banks that have been caught doing this often have class action lawsuits filed against them.