4 ms·

For a long time, there was no mechanism even to protest a charge on a debit card, so conventional wisdom has always been that credit cards were superior. Anoth

For a long time, there was no mechanism even to protest a charge on a debit card, so conventional wisdom has always been that credit cards were superior. Another poster here seems to be indicating that that's not the case any longer, but I haven't seen evidence of that claim yet. From an outsider trying to reason why that's the case, this is what I've come up with: when you pay with a debit card, the money was yours, and now it's theirs: it's effectively an immediate transfer from your account to the recipient's account. When you pay with credit card, on the other hand, you promise the credit card company to pay some amount of money, and the credit card company promises to pay the merchant some amount of money. Credit card companies pay merchants in batches, not for each individual transaction, and so there's a significant amount of time before any money actually changes hands. Furthermore, even if you contest a charge after money has changed hands, the credit card company will simply withhold the contested amount from the next batch payment to the merchant, who is under contract with the credit card company to resolve the dispute appropriately or simply lose the money. Credit card companies have a lot more leverage than individuals to lean on companies to respect their own return policies.

Strom 14y ago
While I agree with your story, I do not think the difference comes from credit/debit. I have a debit card and I do not get any credit with it. However it has a VISA logo and I can still successfuly make complaints to my bank to get transactions reversed. I think the benefits are thus provided by VISA/etc, regardless of what services your bank provides through the card, like credit.
- chimeracoder 14y ago
  > I think the benefits are thus provided by VISA/etc, regardless of what services your bank provides through the card, like credit. See my above reply - they may provide similar services as if as a "courtesy", but the legal obligations for both parties are very different with credit and debit cards (very much in the consumer's favor, if the consumer is using a credit card).
chimeracoder 14y ago
> Credit card companies have a lot more leverage than individuals to lean on companies to respect their own return policies. Not just leverage, but an obligation. Or rather, even if your debit card says Visa or Mastercard on it, they have no legal obligation to get your money back. You don't have an obligation to pay the merchant, but the impetus is on you to get your rightful money back (the debit card company may help, but they are not required to). With a credit card, they don't exactly have an obligation either, but this time it works in your favor - it's the credit card's money, not yours, and while you still have no obligation to pay the merchant, this time it's the company's money that is on the line (the collateral, so to speak). So they will fight tooth-and-nail to get it back, because technically if they don't, they can't collect any money from you. (They may still try, but then you have to weigh the cost of a legal battle with them as well). Think of this in the context of theft/fraudulent use of your card, and you'll see why debit cards are very risky indeed. (Remember that, even if you manage to get chargebacks on your debit card, you may still be liable for the fees for the temporary, eventually-reversed overdrafts!)

Strom 14y ago

While I agree with your story, I do not think the difference comes from credit/debit. I have a debit card and I do not get any credit with it. However it has a VISA logo and I can still successfuly make complaints to my bank to get transactions reversed. I think the benefits are thus provided by VISA/etc, regardless of what services your bank provides through the card, like credit.

chimeracoder 14y ago
> I think the benefits are thus provided by VISA/etc, regardless of what services your bank provides through the card, like credit. See my above reply - they may provide similar services as if as a "courtesy", but the legal obligations for both parties are very different with credit and debit cards (very much in the consumer's favor, if the consumer is using a credit card).

chimeracoder 14y ago

> Credit card companies have a lot more leverage than individuals to lean on companies to respect their own return policies. Not just leverage, but an obligation. Or rather, even if your debit card says Visa or Mastercard on it, they have no legal obligation to get your money back. You don't have an obligation to pay the merchant, but the impetus is on you to get your rightful money back (the debit card company may help, but they are not required to). With a credit card, they don't exactly have an obligation either, but this time it works in your favor - it's the credit card's money, not yours, and while you still have no obligation to pay the merchant, this time it's the company's money that is on the line (the collateral, so to speak). So they will fight tooth-and-nail to get it back, because technically if they don't, they can't collect any money from you. (They may still try, but then you have to weigh the cost of a legal battle with them as well). Think of this in the context of theft/fraudulent use of your card, and you'll see why debit cards are very risky indeed. (Remember that, even if you manage to get chargebacks on your debit card, you may still be liable for the fees for the temporary, eventually-reversed overdrafts!)