12 ms·

Setting your incredulity aside, I'm curious why you think using a debit card would be so shocking. I effectively don't use a credit card at all: I use a debit c

by Twisol 8mo ago

Setting your incredulity aside, I'm curious why you think using a debit card would be so shocking. I effectively don't use a credit card at all: I use a debit card (or an equivalent Apple Pay representation thereof) exclusively. From my perspective, if I want something and I have the money, I'll pay for it. If I want something and I don't have the money, I won't pay for it. I don't often want things outside my budget (and I am not well-off, as a grad student), so I don't often feel any pressure to amortize the purchase over time with a credit card. And I prefer that state of affairs, because I don't want to get in the habit of using someone else's money if I can't afford to pay them back. This isn't a value judgment on people who do use credit cards. There are plenty of reasons why using a credit card by default would be appropriate, and I'm not shocked to hear of someone who does so. But I am curious where your shock comes from, so I shared my story as a data point.

apazzolini 8mo ago
Because you're leaving 2-3% on the table for every transaction. Using a credit card doesn't mean you can't pay it off in full every month, costing you zero in interest, while taking advantage of reward programs.
- Twisol 8mo ago
  I have heard this, and it is probably a flaw in my approach to purchases. But is that really justification to ask "who in the world uses debit cards"? I still feel more comfortable not being on the hook to somebody, and the organizations that extend lines of credit don't do so as a prosocial program, certainly. (Just because some people can safely make use of credit doesn't mean everyone can. I know someone who has unfortunately made poor use of their credit card, and I don't necessarily trust myself to avoid a similar fate.)
  - BenjiWiebe 8mo ago
    No, credit card companies aren't giving out rewards at a loss. Better cards have a higher interchange rate, ie the merchant pays more fees to accept a good card. Hence why cash discounts are a thing (and yes they're legal again).
- wilcoooo 8mo ago
  On top of all the benefits, if for some reason you get hit with fraud or scammed on a debit card, it's a lot harder to get that money back. Credit is an extra layer of protection.
  - Twisol 8mo ago
    I've heard this, too, and it's a good reason to use a credit card at least for significant purchases. But I'd rather see those same protections extended to debit cards. I wish I understood why they aren't.
    - Spooky23 8mo ago
      The fees that fund those protections don’t exist on the debit card. It’s also fundamentally different. There are protections, but they depend on you being aware of the activity to avoid impact. Basically, in the event of fraud with a credit card, Chase or AMEX have a problem. With a debit card you have a problem until the resolve it. In the meantime, your payments and checks may not clear or hit overdraft. As long as you can control your spending, credit cards are a real superpower for consumers.
- Sn0wCoder 8mo ago
  You do realize that 2-4% is not left on the 'table' its taken from the merchant you are shopping at. If you are at a big box store sure but when going to local merchants its best for them if you use debit or cash. One could argue the merchant 'choose' to accept CC but in this day and age its more like extortion because the CC lobbyist were able to make it illegal to pass that charge onto the customer.
  - Twisol 8mo ago
    I had this thought as well. I didn't want to raise it myself, because I don't have any personal evidence that this is the case, but of course the "cash back" has to come from somewhere.
  - direwolf20 8mo ago
    In some countries they simply outlawed such high fees, merchants pay lower fees and there's no cashback.
  - herewulf 8mo ago
    Don't you think the 2 to 4% is built into the prices of every merchant that accepts credit cards, big or small? It's not a great system but it's what we have so using debit instead of credit does mean losing out.
    - Sn0wCoder 8mo ago
      At the big box stores absolutely they have it worked in to the prices. I have no idea if the local mom and pop shops are working that 2-4% into their prices or not.
      - tyre 8mo ago
        Yes, they do. They understand where their margins go and the fees on credit cards are a huge one. They simply don’t have much of a choice.
      - phil21 8mo ago
        Mom and Pop stores are basically the only places left that reliably give you a cash discount for not using a card. Sometimes advertised at checkout, sometimes you need to ask. Especially service companies. They tend to quote out "cash" (aka check/bank transfer) price and then add another 5% or so if you want to pay via card. There of course is very often an even cheaper "actual cash" price too you need to ask for if you are so inclined.
ipsento606 8mo ago
Credit cards are many products rolled into one. Despite the name, many people use "credit cards" simply for rewards and enhanced purchase protections, with only incidental use of the credit facility. In the US market, it is surprising that someone would choose to use a debit card over a credit card (if they have the choice) because they are giving up the rewards and enhanced purchase protections, which are available at effectively zero cost. If I used a debit card over a credit card, I'd effectively be paying ~2% more for most things I buy, for no benefit.
- cosmic_cheese 8mo ago
  Better fraud protection, too. Depending on the bank it can be a real battle to get fraudulent charges dropped and funds restored, but credit card companies go out of their way to make that process easy. Some even offer it as a function of their site/app so you don’t even need to make a call to get things resolved. I have several cards and don’t keep a balance on any of them. They’re a tool with several uses, and one of mine is to be able to pay for things without exposing my debit card/bank account.
- xp84 8mo ago
  Not to mention the grace period. Especially with high interest rates, it's another perk to have thousands of my dollars stay in the bank all month while my credit card bill piles up. This matters less when rates are super low.
  - pc86 8mo ago
    One thing I didn't truly appreciate until my wife and I consolidated our spending and had children - having nearly every expense flow through a credit card puts total spending into perspective without having to look through bank statements or keep up a spreadsheet. Getting a $10k bill when you're expecting $8k (or a $30k bill when you're expecting $20k) can be a pretty jarring event and is a built-in monthly touch point to review budgeting and spending. It wouldn't be quite the same impact spread out over 5 cards paid out of multiple checking accounts with slightly different billing cycles.
steveBK123 8mo ago
You are young, you want to use a credit card to protect yourself and build credit history. Using a debit card, in the event of fraudulent charges, the money is already gone from your bank account and now you are negotiating with your bank to get it back. With a credit card, you file the claim and its generally resolved before your statement closes and anything is due. Your card will also be immediately cancelled, so if its your debit card you will lose ATM access while awaiting the new card. This will happen to you many times over the course of your lifetime, maybe every 5-10 years. Usually when a number is stolen, they speed run getting as many $1000s of charges in before the card is stopped, which would drain your debit card account. Credit history is also important. If you don’t have a credit card and build basic credit history before your first job, you will have trouble signing a lease without a parental guarantor.
- Twisol 8mo ago
  I am young, but not so young as that. I do have a credit card, I just don't use it for anything except the monthly cost of server hosting (to keep it in use). Despite its disuse, I have an "exceptional" credit rating, probably mostly due to the age of the account. So I appreciate the point about credit history, but my habit of preferentially using debit doesn't seem to have been to my detriment on that front. As to fraud protection, I agree, but as noted in another reply, I wish I understood why the protections afforded to credit don't also apply to debit. There must be some systemic reason for it that I'm unaware of. As it stands, my best guess is simply that "it's a perk to entice people to use credit".
  - xp84 8mo ago
    The reason is just that it would be more risky, I think. Compare the scenarios: 1. Scammer clones your credit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The funds are actually not given to the store for a bit given that credit transactions take a while to settle. Upon the dispute, the store now needs to prove that you were there and bought those clothes to get their $500, or else the bank/Visa won't pay them. 2. Scammer clones your debit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The store already got paid though. The bank doesn't want to give you another $500 in case you are actually in on the scam, then they'll be out an additional $500. Eventually assuming they can't prove you actually bought the clothes, I think the store would have the $500 confiscated, but usually you're still liable for $50 if you reported it quickly enough, but could be more if you take too long to report the fraud. Of course debit cards can easily be converted to even easier-to-launder money substitutes, too.
weird-eye-issue 8mo ago
Because I get 2 to 3% back on every single purchase and I have my account set up to automatically get paid off every month so I've never paid a fee or interest for a credit card so I basically get free money, extra protection, and better credit just for using a credit card, that's why. They make money off people who pay interest so I just take advantage of that.
marssaxman 8mo ago
I do the same - I use my debit card for everything, all the time. If I don't have the money to buy something, I'd rather just wait until I do; credit cards make it too easy to spend money faster than I earn it. People who like to tell other people they shouldn't use debit cards often cite fears of fraud, but that's really never been a problem for me.
Spooky23 8mo ago
It’s shocking to many because there are so many downsides to using them. Only the merchant benefits.
greyw 8mo ago
Credit cards are strictly better in all aspects (rewards, protection, free working capital, etc) UNLESS you are bad with money/finances. So there is actually no good reason to use debit cards. I say this as a former user. Makes no sense at all once you think everything through.
- lotsofpulp 8mo ago
  I find my usage of credit cards shrinking every year in the US. It's pretty much narrowed down to non Target retail, travel, and restaurants. As the sellers get bigger and bigger and electronic cash payments become more normalized, I think we'll see more and more sellers charge at least 3%, if not 5% extra for credit cards so that all of their merchant fees and chargeback risk are covered. Right now, it's just a bet that having the same price for credit card and non credit card will result in sellers willing to pay a higher price (a psychological phenomena), but more and more sellers are not betting on that. I wonder if the effect of people being more willing to pay higher prices is seen in discretionary purchases, so travel/non staple retail will continue to incentivize credit card usage, while most other businesses will not.

by Twisol 8mo ago

apazzolini 8mo ago

Because you're leaving 2-3% on the table for every transaction. Using a credit card doesn't mean you can't pay it off in full every month, costing you zero in interest, while taking advantage of reward programs.

Twisol 8mo ago
I have heard this, and it is probably a flaw in my approach to purchases. But is that really justification to ask "who in the world uses debit cards"? I still feel more comfortable not being on the hook to somebody, and the organizations that extend lines of credit don't do so as a prosocial program, certainly. (Just because some people can safely make use of credit doesn't mean everyone can. I know someone who has unfortunately made poor use of their credit card, and I don't necessarily trust myself to avoid a similar fate.)
- BenjiWiebe 8mo ago
  No, credit card companies aren't giving out rewards at a loss. Better cards have a higher interchange rate, ie the merchant pays more fees to accept a good card. Hence why cash discounts are a thing (and yes they're legal again).
wilcoooo 8mo ago
On top of all the benefits, if for some reason you get hit with fraud or scammed on a debit card, it's a lot harder to get that money back. Credit is an extra layer of protection.
- Twisol 8mo ago
  I've heard this, too, and it's a good reason to use a credit card at least for significant purchases. But I'd rather see those same protections extended to debit cards. I wish I understood why they aren't.
  - Spooky23 8mo ago
    The fees that fund those protections don’t exist on the debit card. It’s also fundamentally different. There are protections, but they depend on you being aware of the activity to avoid impact. Basically, in the event of fraud with a credit card, Chase or AMEX have a problem. With a debit card you have a problem until the resolve it. In the meantime, your payments and checks may not clear or hit overdraft. As long as you can control your spending, credit cards are a real superpower for consumers.
Sn0wCoder 8mo ago
You do realize that 2-4% is not left on the 'table' its taken from the merchant you are shopping at. If you are at a big box store sure but when going to local merchants its best for them if you use debit or cash. One could argue the merchant 'choose' to accept CC but in this day and age its more like extortion because the CC lobbyist were able to make it illegal to pass that charge onto the customer.
- Twisol 8mo ago
  I had this thought as well. I didn't want to raise it myself, because I don't have any personal evidence that this is the case, but of course the "cash back" has to come from somewhere.
- direwolf20 8mo ago
  In some countries they simply outlawed such high fees, merchants pay lower fees and there's no cashback.
- herewulf 8mo ago
  Don't you think the 2 to 4% is built into the prices of every merchant that accepts credit cards, big or small? It's not a great system but it's what we have so using debit instead of credit does mean losing out.
  - Sn0wCoder 8mo ago
    At the big box stores absolutely they have it worked in to the prices. I have no idea if the local mom and pop shops are working that 2-4% into their prices or not.
    - tyre 8mo ago
      Yes, they do. They understand where their margins go and the fees on credit cards are a huge one. They simply don’t have much of a choice.
    - phil21 8mo ago
      Mom and Pop stores are basically the only places left that reliably give you a cash discount for not using a card. Sometimes advertised at checkout, sometimes you need to ask. Especially service companies. They tend to quote out "cash" (aka check/bank transfer) price and then add another 5% or so if you want to pay via card. There of course is very often an even cheaper "actual cash" price too you need to ask for if you are so inclined.

ipsento606 8mo ago

Credit cards are many products rolled into one. Despite the name, many people use "credit cards" simply for rewards and enhanced purchase protections, with only incidental use of the credit facility. In the US market, it is surprising that someone would choose to use a debit card over a credit card (if they have the choice) because they are giving up the rewards and enhanced purchase protections, which are available at effectively zero cost. If I used a debit card over a credit card, I'd effectively be paying ~2% more for most things I buy, for no benefit.

cosmic_cheese 8mo ago
Better fraud protection, too. Depending on the bank it can be a real battle to get fraudulent charges dropped and funds restored, but credit card companies go out of their way to make that process easy. Some even offer it as a function of their site/app so you don’t even need to make a call to get things resolved. I have several cards and don’t keep a balance on any of them. They’re a tool with several uses, and one of mine is to be able to pay for things without exposing my debit card/bank account.
xp84 8mo ago
Not to mention the grace period. Especially with high interest rates, it's another perk to have thousands of my dollars stay in the bank all month while my credit card bill piles up. This matters less when rates are super low.
- pc86 8mo ago
  One thing I didn't truly appreciate until my wife and I consolidated our spending and had children - having nearly every expense flow through a credit card puts total spending into perspective without having to look through bank statements or keep up a spreadsheet. Getting a $10k bill when you're expecting $8k (or a $30k bill when you're expecting $20k) can be a pretty jarring event and is a built-in monthly touch point to review budgeting and spending. It wouldn't be quite the same impact spread out over 5 cards paid out of multiple checking accounts with slightly different billing cycles.

steveBK123 8mo ago

You are young, you want to use a credit card to protect yourself and build credit history. Using a debit card, in the event of fraudulent charges, the money is already gone from your bank account and now you are negotiating with your bank to get it back. With a credit card, you file the claim and its generally resolved before your statement closes and anything is due. Your card will also be immediately cancelled, so if its your debit card you will lose ATM access while awaiting the new card. This will happen to you many times over the course of your lifetime, maybe every 5-10 years. Usually when a number is stolen, they speed run getting as many $1000s of charges in before the card is stopped, which would drain your debit card account. Credit history is also important. If you don’t have a credit card and build basic credit history before your first job, you will have trouble signing a lease without a parental guarantor.

Twisol 8mo ago
I am young, but not so young as that. I do have a credit card, I just don't use it for anything except the monthly cost of server hosting (to keep it in use). Despite its disuse, I have an "exceptional" credit rating, probably mostly due to the age of the account. So I appreciate the point about credit history, but my habit of preferentially using debit doesn't seem to have been to my detriment on that front. As to fraud protection, I agree, but as noted in another reply, I wish I understood why the protections afforded to credit don't also apply to debit. There must be some systemic reason for it that I'm unaware of. As it stands, my best guess is simply that "it's a perk to entice people to use credit".
- xp84 8mo ago
  The reason is just that it would be more risky, I think. Compare the scenarios: 1. Scammer clones your credit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The funds are actually not given to the store for a bit given that credit transactions take a while to settle. Upon the dispute, the store now needs to prove that you were there and bought those clothes to get their $500, or else the bank/Visa won't pay them. 2. Scammer clones your debit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The store already got paid though. The bank doesn't want to give you another $500 in case you are actually in on the scam, then they'll be out an additional $500. Eventually assuming they can't prove you actually bought the clothes, I think the store would have the $500 confiscated, but usually you're still liable for $50 if you reported it quickly enough, but could be more if you take too long to report the fraud. Of course debit cards can easily be converted to even easier-to-launder money substitutes, too.

weird-eye-issue 8mo ago

Because I get 2 to 3% back on every single purchase and I have my account set up to automatically get paid off every month so I've never paid a fee or interest for a credit card so I basically get free money, extra protection, and better credit just for using a credit card, that's why. They make money off people who pay interest so I just take advantage of that.

marssaxman 8mo ago

I do the same - I use my debit card for everything, all the time. If I don't have the money to buy something, I'd rather just wait until I do; credit cards make it too easy to spend money faster than I earn it. People who like to tell other people they shouldn't use debit cards often cite fears of fraud, but that's really never been a problem for me.

Spooky23 8mo ago

It’s shocking to many because there are so many downsides to using them. Only the merchant benefits.

greyw 8mo ago

Credit cards are strictly better in all aspects (rewards, protection, free working capital, etc) UNLESS you are bad with money/finances. So there is actually no good reason to use debit cards. I say this as a former user. Makes no sense at all once you think everything through.

lotsofpulp 8mo ago
I find my usage of credit cards shrinking every year in the US. It's pretty much narrowed down to non Target retail, travel, and restaurants. As the sellers get bigger and bigger and electronic cash payments become more normalized, I think we'll see more and more sellers charge at least 3%, if not 5% extra for credit cards so that all of their merchant fees and chargeback risk are covered. Right now, it's just a bet that having the same price for credit card and non credit card will result in sellers willing to pay a higher price (a psychological phenomena), but more and more sellers are not betting on that. I wonder if the effect of people being more willing to pay higher prices is seen in discretionary purchases, so travel/non staple retail will continue to incentivize credit card usage, while most other businesses will not.