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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

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 9mo 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 9mo 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.
  - tempaccsoz5 9mo ago
    So the protection is that debit cards take longer to pay out to merchants? An increased window to dispute charges doesn't strike me as innovative but more like an arbitrary variable from the CC company.
    - kelnos 9mo ago
      No, the protection is that when you pay with a credit card, no money has left any of your accounts, and you have plenty of time to dispute the charge before it does. With a debit card, your money is out of your account, immediately, and you have to fight to get it back. For some banks, for some accounts, this isn't a big deal, and you might have it back in a few hours. But for others it might take weeks, and in the meantime you've failed to pay your rent or mortgage.
tempaccsoz5 9mo ago
This varies a lot between countries and cultures. For example in New Zealand, EFTPOS cards are very popular (similar to debit cards, but issued directly by our banks so no user fees ever - the merchant pays for the machine and that's it). People usually have all 3 - an EFTPOS card for most in-person purchase (although online EFTPOS is gaining adoption), a debit card for online or paywave-only places, and a credit card for large purchases/ emergencies. Credit cards here are highly unpopular among the under-25 age bracket; most young people just have EFTPOS and debit. I think this might be a result of our stricter banking regulations compared to economies like the U.S.; it's difficult for banks to offer tempting enough rewards schemes to entice people to credit cards. Additionally, there is much less of a borrowing culture - most people will only ever properly borrow money once - buying a house. Paying cash for cars is the norm, and purchasing anything else on finance is seen as stupid compared to just saving the money (and earning the interest yourself).
marssaxman 9mo ago
That has not been my experience at all. I've been using debit cards for all my everyday non-cash purchases for about thirty years now, and it's worked just fine. I expect to keep doing it indefinitely. I have had exactly one encounter with fraud: a vindinctive ex-girlfriend stole my card info and had herself a little shopping spree, emptying my checking account. I walked into the credit union branch, filed a report, and walked out with $300 and a new card. All the stolen money was restored within a few days. It was not a big deal.
- Spooky23 9mo ago
  You’re lucky. My colleague had his skimmed at a gas station and his bank froze his funds, causing his mortgage, car loans and other stuff to bounce. Major PITA.
  - marssaxman 9mo ago
    I'm not lucky, I just don't use commercial banks. I had to get screwed over a few times before I learned that lesson, but it did eventually stick.
    - phil21 9mo ago
      Eh, using a credit union is really no less risky - from personal direct experience. It's luck of the draw. I have no experience with small commercial banks though.
- blonder 9mo ago
  May I ask why you eschew the basically free money that comes from credit card rewards as a responsible credit card user?
  - marssaxman 9mo ago
    Is it really free money? Actual cash? I've always seen rewards programs advertised in terms of discounts on specific products or services: consumer electronics, cruise vacations, furniture, gift cards, and other things I rarely spend money on. I expect it to be an overstock clearinghouse, something like the old Columbia House record club, where you would page through a catalog of random stuff looking for anything you could convince yourself to settle for, just because you'd already paid for the subscription. It sounds like a hassle and I'd rather ignore it.

Twisol 9mo 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 9mo 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.
- tempaccsoz5 9mo ago
  So the protection is that debit cards take longer to pay out to merchants? An increased window to dispute charges doesn't strike me as innovative but more like an arbitrary variable from the CC company.
  - kelnos 9mo ago
    No, the protection is that when you pay with a credit card, no money has left any of your accounts, and you have plenty of time to dispute the charge before it does. With a debit card, your money is out of your account, immediately, and you have to fight to get it back. For some banks, for some accounts, this isn't a big deal, and you might have it back in a few hours. But for others it might take weeks, and in the meantime you've failed to pay your rent or mortgage.

tempaccsoz5 9mo ago

This varies a lot between countries and cultures. For example in New Zealand, EFTPOS cards are very popular (similar to debit cards, but issued directly by our banks so no user fees ever - the merchant pays for the machine and that's it). People usually have all 3 - an EFTPOS card for most in-person purchase (although online EFTPOS is gaining adoption), a debit card for online or paywave-only places, and a credit card for large purchases/ emergencies. Credit cards here are highly unpopular among the under-25 age bracket; most young people just have EFTPOS and debit. I think this might be a result of our stricter banking regulations compared to economies like the U.S.; it's difficult for banks to offer tempting enough rewards schemes to entice people to credit cards. Additionally, there is much less of a borrowing culture - most people will only ever properly borrow money once - buying a house. Paying cash for cars is the norm, and purchasing anything else on finance is seen as stupid compared to just saving the money (and earning the interest yourself).

marssaxman 9mo ago

That has not been my experience at all. I've been using debit cards for all my everyday non-cash purchases for about thirty years now, and it's worked just fine. I expect to keep doing it indefinitely. I have had exactly one encounter with fraud: a vindinctive ex-girlfriend stole my card info and had herself a little shopping spree, emptying my checking account. I walked into the credit union branch, filed a report, and walked out with $300 and a new card. All the stolen money was restored within a few days. It was not a big deal.

Spooky23 9mo ago
You’re lucky. My colleague had his skimmed at a gas station and his bank froze his funds, causing his mortgage, car loans and other stuff to bounce. Major PITA.
- marssaxman 9mo ago
  I'm not lucky, I just don't use commercial banks. I had to get screwed over a few times before I learned that lesson, but it did eventually stick.
  - phil21 9mo ago
    Eh, using a credit union is really no less risky - from personal direct experience. It's luck of the draw. I have no experience with small commercial banks though.
blonder 9mo ago
May I ask why you eschew the basically free money that comes from credit card rewards as a responsible credit card user?
- marssaxman 9mo ago
  Is it really free money? Actual cash? I've always seen rewards programs advertised in terms of discounts on specific products or services: consumer electronics, cruise vacations, furniture, gift cards, and other things I rarely spend money on. I expect it to be an overstock clearinghouse, something like the old Columbia House record club, where you would page through a catalog of random stuff looking for anything you could convince yourself to settle for, just because you'd already paid for the subscription. It sounds like a hassle and I'd rather ignore it.