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Your Take: Why Use Debit Cards?
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They lack the same protections as credit cards, they allow access directly to your checking account, and many of them don’t have cashback or any other benefits to speak of. So, why do so many people use debit cards!? I was shocked to find this stat, “Debit cards have overtaken credit cards as Americans’ plastic of choice for in-store transactions—33 percent debit, compared with 19 percent credit,” in a scary article about debit card fraud. I can understand it if you use debit cards because you can’t get a credit card or you don’t trust yourself with a credit card, but outside of those two reasons why would anyone use debit?
Educate me!
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I don’t use them for all the reasons you sight.
However, debit cards are great for teenagers. It is a similar process to using a credit card at the store and as a parent, I don’t have to worry about an unpaid statement buried under a pile of clothes in a certain person’s bedroom.
The debit card is co-branded as a Mastercard, so if the teenager finds herself in a situation where a real credit card is needed, she’s covered without having to call home.
We use debit card for all our everyday purchases. The account is basically a parking place for all our monthly expenses. We don’t leave any extra money in that checking account apart from what we estimate we would spend during the month. Using a credit card and the possibility of forgetting to pay the balance and incurring a finance charge doesn’t make me feel comfortable.
My debit card gives me cash back and all that. It’s great. It’s quite flexible, and I don’t have a credit line, just whatever is in my checking account. Plus, my CU is very protective, so if they suspect a charge, they contact me and reverse it, no questions asked.
…because we’re not spending money we don’t have. If debit card fraud is an issue it’s because Congress hasn’t invoked adequate legislation to bring the same level of protection afforded credit cards.
Maybe 33% of people don’t trust themselves with credit cards…
*raises hand*
I’m one. Even when my balance is finally paid off in the middle of this month, I will only use it occasionally and immediately transfer money to cover it.
Also, it’s my understanding that my debit card (Capital One) comes with credit card protection, when credit is selected as opposed to debit.
i live in nz, and here eftpos cards (something like a debit card) is most commonly used followed by cash. i moved here more than a year ago and have not carried cash with me since. not only does it save me from the worry of losing my cash in case i lose my wallet, but it helps me track my spending online. one big thing to note is that there are transactions that get rounded off to the next whole number. say i buy a $2.95 item, i’d end up paying $3 if i do so in cash. if i buy a $2.05 item, i’d pay $2. i only like it when it works in my favor!
using debit/eftpos cards alleviate this unfair transaction. and yes, there is no 5c coin here in nz anymore 
My bank sent us debit cards as our ATM cards and I sent them back, asking never to be switched to them. Even given protection levels similar to credit cards, the difference with fraud is that with a debit card the amount of the fraudulent charge is gone and has to be added back into your account vs. credit card where you dispute BEFORE/without laying out the money. Also, if you’re disciplined, credit card essentially gives you interest-free loan for 2-6 weeks (until balance is due). Finally, although I can’t say I’ve looked extensively at rewards programs for debit cards, from what I’ve seen, credit cards offer better rewards. Bottom line is that you need to be disciplined with your spending and pay off the balance in full each month.
Has nobody brought up the point that you can use debit cards with a PIN? In Canada we have a real ‘Debit Card’ that can only be used to access your account and cannot be used where Visa and Mastercard can, it needs a special machine (or one machine that processes both). These bank issued cards you need a 4-6 digit pin which you enter on a pin pad to use . . . hence no problems with fraud unless someone has a special machine to get the card swipe and captures the PIN somehow.
I think this is different than the ‘Visa Check Cards’ or similar, but that’s why I use my debit card far more.
Plus I hate the thought of taking out a loan to buy lunch.
Beats me, I got my credit card exactly for the extra protection it’s offering. This is practically the only real reason I can see for using a credit card. The unreal reason is that it adds to my credit score. I don’t like it, but it does.
According to Visa you get the same protection with a Visa debit card (when you process it as a CREDIT transaction) as you do with any Visa credit card. No reason not to use it.
I don’t like to walk around with large sums of cash. Also, I spend more on average with a credit card because I don’t ’see’ the effects of that purchase immediately. I like how with a debit card I can use it and go home and check my online statement that night and see how much money I have left in my checking account.
Has nobody brought up the point that you can use debit cards with a PIN?
Not where I work.
Even not trusting oneself with a credit card shouldn’t really be a reason not to use one and use a debit card instead. First, just set a low limit on what you would have spent with the debit card. Second, set it up so you pay off the balance automatically from your checking account (at either end — either through your checking account BillPay or from the credit card online payment options). The cash back options with credit cards (and protections afforded but for cobranded debit cards) are simply free money.
If someone doesn’t use a credit card because they don’t ‘trust’ themselves, they should let another adult do all the spending for they really don’t trust themselves with money.
I prefer to use my own money rather than other people’s money. And for those who aren’t disciplined enough to pay them off every month, they would soon find themselves deep in credit card debt.
I just prefer to not play the credit card game.
I try not to use either and stick to cash! However, the debit casr offers for me the folowing:
-Can’t spend more then I have
-Convenience – It is faster to buy gas with a card now then with cash!
-Being stuck somewhere that wont take a check, or not enough cash on me
Like I said though Debit casrds still lead to overspending!
If given the option I will always use debit (as a credit card). Same protection, says Chase, and I get airline miles just like I do with my CC. Like an earlier commentor states, debit cards represent real money. If you can earn points just like a CC, why take the extra step of paying with a CC, then paying your CC off with your checking account? You risk missing the payment and getting your credit report dinged.
If it weren’t for my credit score implications, there’s rarely a case I would prefer to use a CC (rental car insurance, etc).
My .02
Credit cards are a real pain in the arse and you have to be really on the ball to navigate all the rules, changing due dates, restrictions, extra charges, etc etc. Why bother with that when you don’t have to? I bet most people end up paying more in interest or late fees than they ever make back in “rewards” anyway.
I would turn the question around, why would you ever use a credit card if you can use a debit card instead?
I can’t help but ask what these people do when they do (try) to spend more than they have. Must be very upsetting. Do they have to make an emergency atm trip? Jump online? Do they put items back to get under their balance? What if they already ate it? What if they are out of gas? Such pleasures to look forward to.
I do not like debit charge cards for the main reason already stated. False charges to them take money from you after the fact. What is the limit of “full” protection from companies like Chase? It is not uncommon for me to have very large sums of money in my checking account for something like a day prior to transferring to a brokerage or savings account. Would Chase refund an amount like $50k? I would rather not have those sorts of funds available to a waiter at a restaurant with a portable scanner or a hacker somewhere.
My wife had her CC scanned and fraudulent charges took it to the limit. I was glad we just had to fill out an affidavit and cancel the account. Other than having to reset a few auto-payment transactions (like Dish) to a new CC account, there were no other repercussions. After that, I asked a room of 30 people at my work, “How many have encountered fraudulent CC charges?” At least 10 hands went up.
Auto payments from bank to CC take care of late payment worries.
I hate paying bills. Credit cards can work just as well or better in some aspects, but then you have to transfer money once a month. I like having realtime information on my account balance rather than having to keep track or reconcile numbers in quicken or whatever whenever we spend money.
Plus, our debit card offers rewards just as good as our credit card. As far as protection, our card has fantastic protection. Just a few weeks ago our debit card information was stolen and there were a half dozen charges at random places all across the country within a span of a few minutes. The bank suspended the card and called us within a half hour of the theft to alert us and confirm. We confirmed it was fraud, they issued a new card and instantly credited our account with the missing money.
The people who answered with not having to worry about paying a bill for a credit card need to wise up. I mean do you have to worry about paying a power bill? Yes. A mortgage? Yes. “It’s just one extra bill.” Duh, you’re supposed to have the money in your account first before you buy anything that’s the point of having a credit card.
Mase responds:
“If someone doesn’t use a credit card because they don’t ‘trust’ themselves, they should let another adult do all the spending for they really don’t trust themselves with money.”
Just because I don’t trust myself to use a credit card does not mean I don’t trust myself with money. Frankly, I do. Which is WHY I use a debit card instead. I have never once even come close to overdrawing on my debit-checking account. Not once. I know what I have to spend, I know what my budget is, and I spend within that. Even while paying down debt (successfully) on a low salary within 6 months of finishing college.
Say what you will about the benefits of credit cards for regular consumers, but you’re just buying (literally) into the myth credit card companies want you to believe. That they are “on your side” and will “offer you protection.” Sure, they will sometimes, but most of the time, they just want to KEEP your hard earned money for their profits. Playing “Change the Due Date” and double cycle billing, just hoping you’ll mess up once, so they can get you.
In the end, for simplicity’s sake, I’d rather check my checking account balance to know how much money I REALLY have.. I’m not going to let a credit card company play games with me anymore. I’ll use my credit card with automatic transfers to pay bills, but nothing more. No one should have the opportunity to earn interest off of me.
Personally, I only use my debit card for purchases at Costco, since they don’t accept Visa/Mastercard (the credit cards I have).
Keep in mind that your readers are probably not representative of the larger population; that is, your readers are interested in personal finance and I suspect that there are additional reasons people *not* interested in personal finance would have that your readers may not have considered.
I tend to spend less per transaction when using a debit card than a credit card. Yes, I’m an adult, but apparently the idea of using my own money rather than the bank’s money makes me more frugal. Admittedly, they are a little more difficult to deal with in terms of fraud – mainly because they are covered under Regulation E which provides shorter time frames than Regulation Z for credit products.
Don’t understand it either. I do take one debit card with me when I travel to get cash out of ATMs in addition to the credit card, but it is a debit card to an account with only a small amount of money. I wouldn’t risk carrying the debit card to my main checking around.
I can kind of understand that some people don’t feel like they are spending money when they don’t use cash. For me $X is $X regardless of how you pay it, but everyone is different. What I don’t understand is how having a credit card set up to take the full balance automatically from the checking on the due date is different psychologically from a debit card. In both cases the full purchase amount is automatically deducted. The only difference is timing. So I have a question for some of the posters who said they tend to spend more with credit than debit: if you had your full credit card balance automatically deducted from your account, would you still view it different psychologically from debit cards?
… because Costco accepts debit cards and American Express only and I don’t have an AE card!!!
I use a rewards credit card for in-store transactions, unless I want cash back from the register, which many merchants will provide for free with purchase.
I have several family members who simply won’t have a credit card, period, so they use debit cards all the time.
i use a credit card, as you say, because of the protection it offers, but i vaguely recall that you can use a debit card on the credit network — next time a cashier asks you whether the transaction is ‘debit or credit’ say credit and see what happens. your money will be taken out of your bank account, just as if it were a debit transaction, but you do have the fraud protection because the transaction was taken on a credit network . . . if i’m not mistaken!
Coming from a recent college grad…I never carry cash…only my debit card. It’s protected and gives me rewards just like a credit card. But unlike a credit card I’m not worried that I’m incurring my debt on top of student loans. I prefer the use of my own money and the security that I’m not going to be owing someone else part of that money plus more (paying interest)…everyone nows how the credit card works you end up paying more than the item is worth (not alot of college students have steady pay to pay off the card as soon as it post)…Carrying cash in college just isn’t convient. Most of the time the bank you used before you left home (if you went to a non-local college) the atm for it might not be close by or even in there. So you have to deal with bank fees.
I can truly understand why more people prefer debit cards…using the money you earned…especially with the trend of moving away from living credit. What I can’t understand is why people are still diehard credit card fans…I guess I’m with the school of thought if you don’t have the money to pay for it than perhaps you shouldn’t be buying it and if you have the money why use credit cards?
I think debit cards are best used for people who have sworn off credit. No Credit Needed is like that. He can reserve rental cars and buy stuff over the Internet which he couldn’t do if he gave up plastic completely.
depends on the debit card issuer concerning what protections you have. We get cash back and have the same protections as a credit card. I use debit for purchase up to $15 (I get 15cents every time I use the debit card), where the 1% transition point on cash back is with my credit card (except for things like drug store and gas purchases which are higher cash back amts). I also mainly use credit cards, though, because i can earn interest during the grace period.
This is really an interesting exchange on a subject that has always puzzled me. Considering the risks of fraud or robbery (having someone walk you to an ATM at gunpoint), carrying a debit or ATM card around strikes me as a crazy idea. At least if someone racks up a bunch of charges on your credit card, you’re only liable for $50 — and in the past my credit card issuer hasn’t even expected me to pay that much.
But now I see it’s a “diff’rent strokes for diff’rent folks” thing. What works most effectively with your cast of mind is what works. When I used to carry an ATM card, money washed through my fingers like water — I can’t keep track of cash and hate not knowing where it all went (so fast!!!). And I worry that with a debit card I might draw down my account enough that there wouldn’t be enough left to cover automatic payments for utilities and insurance. When it’s 110 in the shade, you REALLY don’t want to bounce a payment to the power company! To avoid having that happen, you’d need to have even more self-discipline with a debit card than not overcharging on a credit card requires.
I want to pay for groceries with money I have, rather than putting it on a credit card and risk incurring interest charges.
For the average person, debits are faster and no cash is needed. We are rapidly moving toward cashless at most transaction levels period. Debit uses your own money and doesn’t encourage the “mentality of credit” in my estimation. Credit for those who can’t pay it off everymonth is desensitized buying. I have been there and don’t want to go back. Credit is the “opiate of the masses”. Even paying it off each month allows you to go through the ceremony of buying without immediate cash impacts and any rehab counselor can tell you about how powerful the ceremonies around additions are. If debit legislation needs to be beefed up, that’s where to put the energy then.
There are a lot of misconceptions regarding the safety of debit cards.
Jim, I have responded to your post on my blog. With money management practices that we should all have anyway, such as making sure you have your card (or know where it is) every day and matching your receipts against statements, debit cards are just as safe and just as protected as credit cards.
Here’s the link:
http://moneymyths.org/blog/2008/01/07/myth-debit-cards-are-not-as-safe-as-credit-cards/
Buying on a credit card makes my brain go, “wheeeee!” I would likely overspend and never think about paying it back (until later, when the bill came, and then I might forget to pay it). Debit card says, “This is your money, in your actual bank account, which you need for other things, so put the shoes back on the rack.” ‘Tis all in the mindset, I guess.
I have not overdrafted since I was in college (lo, these many years ago); I always use a pin number, even at the gas station; my debit card has Visa protection; and I don’t feel that I’m in personal danger carrying my debit card around (wouldn’t someone be more likely to steal my credit card?). The only thing I wish is that more stores would check ID, but I guess I can’t have everything.
Everyone claims that there is so much risk involved in using credit cards. Eg double billing cycle, change the due dates, whatever. I have been using my citi dividends card for 3 years now and I have had one issue with citi trying to charge me a $12 bogus fee. I simply called them up told them I would like it removed as a courtesy and in 3 minutes it was removed.
Alternatively, you can beleive Lauren’s Myth:
“they just want to KEEP your hard earned money for their profits. Playing “Change the Due Date” and double cycle billing, just hoping you’ll mess up once, so they can get you.”
And miss out on the free $300 cash per year I receive in rewards? No thanks, I’ll play the game. Not to mention the additional interest I make on my money while it sits in a high yeild savings account until the end of the month.
I’m now working on my finances after years of neglect. I currently have close to $10,000 in credit card debt that I’m trying to get rid of, spread over four cards, each earning 0% interest at the moment. If I spend, say, $300 in a month on groceries and put it on a credit card, that $300 sits there and collects interest at usually 20% or more until the balance of the $10,000 is paid off first. Obviously, that won’t be for a while, so I can’t afford to put anything else on credit. To me, using the debit card is the same as paying cash. Not ideal, I know, but it’s what I have to work with for now.
Wow! American banks are sooooooo backwards!!!! I’ve been using a debit card ever since the first issue here in Europe and my account balance is definitely protected. Should I ever find that someone has accessed my account it is my responsibility to immediately notify my bank and call a central reporting number. Such an occurrence did happen to my husband. (He checks his online account balance daily.) He immediately notified the bank which chased the problem down. Someone had made a paper transfer and transposed account numbers which caused the my husbands account to be debited rather than his own. We received an apology, indirectly through the bank, from the other customer and my husbands account to reimbursed. I’m sure that it can be considerably more complicated if fraud is involved but it is important and one’s own responsibility to monitor one’s own bank account regularly.
I am simply shocked by most of the posts. Until the rules change, I will continue to use credit cards(cc) over debit cards(dc). Here are my reasons why:
1) Currently, the rewards offered by CC are greater using a DC.
2) Time value of money. Spend the banks money now; collect the interest on the money; pay with your money 39-50 days later…without ANY fees or finance charges.