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[.GqueB.]

First, they offer less protection than a credit card if the card is stolen or the number is lifted somehow.

Second, say you buy gas on a debit card and you only need $30 worth. Because it's debit they put a hold of $70 on your card. If you have less than $70 on your card you can get hit with an overdraft fee. But now that the federal gov't passed that overdraft protection law, gas stations can outright deny your debit card if you don't have enough to satisfy your hold. Hell, even if you did have enough money and needed to use that other $40 later that day, you can't because it's on hold.

You don't build credit with debit cards.

You might as well just carry cash with you, or use a credit card but don't spend more than you have in your account.

I know this was back on page 1 but these are some truly awful reasons.

 

[Drkirby]

Apparently he wants us credit card users to NOT pay off our debt on time so that we're using it properly! You're not properly using your credit card if you're not paying interest every month y'know.

If I pay for something with a credit card but the money doesn't go out of my account until 3 days later, 3 months later, or 3 minutes later, it's still credit. That's pretty much the definition of buying something on credit.

I wonder if credit card companies could legally make what you buy start accumulating interest the same day.

 

[empty vessel]

What fees?

Fees from merchants for each card transaction. Merchants have to pay banks and credit card companies to accept credit card payments. Merchants are charged a fee for each credit transaction. (That's why some merchants have minimum purchase requirements before they'll allow you to pay with credit. They can actually lose money on sales if they don't.)

Apparently he wants us credit card users to NOT pay off our debt on time so that we're using it properly! You're not properly using your credit card if you're not paying interest every month y'know.

If I pay for something with a credit card but the money doesn't go out of my account until 3 days later, 3 months later, or 3 minutes later, it's still credit. That's pretty much the definition of buying something on credit.

What? No, fool. I'm merely pointing out that using a credit card in this manner isn't really using credit (except in a hypertechnical sense) and it isn't what credit cards were meant for. It is, however, what credit card companies have turned them into for the specific purpose of raking in merchant fees, which has had the result of raising the prices of consumer goods. People who use credit cards and get rewards are partially (or in some cases are completely) compensated for this raise in prices by the rewards, while those who either cannot get a credit card or abstain from playing this silly game subsidize credit card companies and users.

 

[kehs]

I wonder if credit card companies could legally make what you buy start accumulating interest the same day.

They can, but they don't cause everybody would tell them to fuck off.

Grace periods are one of their gimmicks to pull in new customers.

 

[GaimeGuy]

I wonder if credit card companies could legally make what you buy start accumulating interest the same day.

I believe they can, but they choose not to, as that would be springing the trap immediately and turn mostly everyone away from using credit cards.

 

[JGS]

I believe they can, but they choose not to, as that would be springing the trap immediately and turn mostly everyone away from using credit cards.

They definitely can. In fact I'm sure some horrible cards do, but all of them have the option by virtue of cash advances.

 

[SapientWolf]

I know this was back on page 1 but these are some truly awful reasons.

I don't see why. I only use my debit card at the ATM and I've never paid a dime of finance fees in my life. I use my CC for everything because of those reasons.

 

[MooMoo]

So arguments aside, I don't have a credit card right now. Assuming I always make my monthly payments in full, are there any other things I should look out for? Like, how much of my credit limit should I spend? Are there any particular cards that are good for a guy like me (no credit history)? Is there a good site for all this stuff?

 

[AndresON777]

I hope so. This would be good for people on drugs.

=)

 

[CrankyJay]

I know this was back on page 1 but these are some truly awful reasons.

Explain why. You don't get a free pass.

 

[Phoenix]

They definitely can. In fact I'm sure some horrible cards do, but all of them have the option by virtue of cash advances.

Yeah, there are cards out there that start accruing interest immediately. Last time I looked a few years ago some department store cards were doing that - but hopefully people aren't crazy enough to get a department store card when there are better options out there.

That said, I will continue to use my debit card for everything that I want to pay for outright and use my AMEX (the only card I carry) to get warranty protection on everything else.

 

[CrankyJay]

So arguments aside, I don't have a credit card right now. Assuming I always make my monthly payments in full, are there any other things I should look out for? Like, how much of my credit limit should I spend? Are there any particular cards that are good for a guy like me (no credit history)? Is there a good site for all this stuff?

Lots of people on GAF are fans of the Amazon.com visa card. You can ask them for a lower limit. You have no obligation to spend any amount on your card. I spend about 10-15% of my limit every month. I have several credit cards where I don't spend a thing on them, and they are backups for emergency purposes.

The only time I ever go over 50% if is I'm making a big purchase like a vacation, in which case I have the money saved up and pay it off immediately.

 

[Bentendo]

But as part of the Wall Street reform legislation that was passed last year, these fees are being slashed. The Fed is currently proposing rules that would go into effect in July and would cap interchange fees at 12 cents.

As a retailer, this makes me really happy.

 

[WickedAngel]

Yeah, there are cards out there that start accruing interest immediately. Last time I looked a few years ago some department store cards were doing that - but hopefully people aren't crazy enough to get a department store card when there are better options out there.

That said, I will continue to use my debit card for everything that I want to pay for outright and use my AMEX (the only card I carry) to get warranty protection on everything else.

Not only that, but if your card doesn't already accumulate interest immediately and these new rules on debit cards pass, you can expect that lack of immediate interest accrual to change as quickly as they can rewrite the terms of your contract.

People don't see the danger but they'll understand it soon enough. Allowing limitations to access to one's own money is rarely a good thing.

 

[JGS]

As a retailer, this makes me really happy.

So you can lower your prices?

Spoiler

Sorta kidding. Sorry

 

[empty vessel]

So you can lower your prices?

Spoiler

Sorta kidding. Sorry

Capitalism suggests so, if he has any competition to speak of. (And if he doesn't have competition, there ought to be more governmental intervention than regulating the merchant's interchange fees.)

It's not something that happens immediately. Prices may not drop at all. But if they do not drop, they will stay where they are longer than they otherwise would have creating a real reduction when inflation is accounted for. All of this on average, of course. Lower interchange fees means more money for merchants and consumers to divvy up between themselves. And consumers will get a share of it.

 

[JGS]

Capitalism suggests so, if he has any competition to speak of. (And if he doesn't have competition, there ought to be more governmental intervention than regulating the merchant's interchange fees.)

It's not something that happens immediately. Prices may not drop at all. But if they do not drop, they will stay where they are longer than they otherwise would have creating a real reduction when inflation is accounted for. All of this on average, of course. Lower interchange fees means more money for merchants and consumers to divvy up between themselves. And consumers will get a share of it.

The problem is interchange fees are not something consumers know a lick about- meaning that there is less incentive for retailers to even compete on that point. It's kind of like gas prices. Some stores get it cheaper, but usually most of them are within a penny or two of each other.

Also, since most retailers are selling thing for MSRP (or discounted prices from the manufacturer/producer), they really can't haggle with price too much anyway or, again, have no reason to affect the price considering the price is based on a cash purchase which is of the greatest benefit to the retailer. In other words, no reason to lower the price since it's not even tied to the interchange rate, but the cash equivelant.

I suppose promotions could be better in theory since there's a little more of the margin to play with, but like you said even the best case scenario will be a long time coming and by that time, banks would have figured out a way to make even more money. In fact, I think they'll have that figured out within the year but no more than a couple of years tops.

 

[krae_man]

So you can lower your prices?

Spoiler

Sorta kidding. Sorry

It is unrealistic to expect that. It will be factored in when deciding on price increases in the future but that's it. Something similar happened in Canada when the GST dropped from 7% to 5%, all the businesses that had a "tax included" price model just kept the extra 2%. Some people bitched but people don't think. Did they expect chocolate bars in vending machines to go from $1.25 to $1.23 or something?

 

[MedHead]

I have never used any credit cards, so I imagine my credit score must be pretty disappointing. What service would any of you recommend for me to use to find out my score?

 

[kehs]

I have never used any credit cards, so I imagine my credit score must be pretty disappointing. What service would any of you recommend for me to use to find out my score?

There's no "official credit score". There are three major entities that hand out credit scores, but they will vary depending on their own criteria.

You can get 1 free report (not score) from each per year. (by law)

https://www.annualcreditreport.com/cra/index.jsp

The score costs extra for each service.

 

[grumble]

Interesting thread.

I'm actually involved with this industry up north, and I can say that noting beats using credit cards and paying them off every month from a consumer's perspective. There are often rewards programs, and you build credit. Debit card use also has downsides; some banking plans have a limit on POS purchases before you start getting charged fees, you may go into overdraft (which does nasty things to your credit and has fees), and you forfeit those reward programs.

If you aren't sure that you have the discipline to pay off your credit cards every month, then don't use them. If you are responsible enough to make it happen, then they are a better choice for consumers.

 

[~Kinggi~]

Interesting thread.
If you aren't sure that you have the discipline to pay off your credit cards every month, then don't use them. If you are responsible enough to make it happen, then they are a better choice for consumers.

This is the source of the issue here that some people don't realize.

People as a whole have actually decreased their credit card debt of recent. Banks don't like this. They want people in miserable debt so they can make money.

Many people end up in debt because they simply don't have the willpower or discipline to keep from using a credit card cause its so easy. So a lot of these people use debit cards instead as a means to keep themselves in check.

Banks are going to force you now to use Credit Cards, therefore betting on people's procrastination in paying shit off or their failed attempts at keeping the discipline.

Once people get forced into using Credit Cards (we already have people in this thread asking what are the best ones to get, great success!) then the banks can go to town on raping them with creative ways of accumulating interest.

Much of the blame will still end up with the user, but its a slow progression towards a system where the blame starts to shift from them into the hands of someone else.

 

[Kabuki Quantum Lover]

Weird. At least in Toronto, debit cards are the bee's knees. I rather use debit (I think it allows for more financial control) than credit, although I do have two credit cards (should dump one of them soon).

 

[MooMoo]

Lots of people on GAF are fans of the Amazon.com visa card. You can ask them for a lower limit. You have no obligation to spend any amount on your card. I spend about 10-15% of my limit every month. I have several credit cards where I don't spend a thing on them, and they are backups for emergency purposes.

The only time I ever go over 50% if is I'm making a big purchase like a vacation, in which case I have the money saved up and pay it off immediately.

Hm, I see. I have been looking at the Amazon one, just because I shop there so often. Thanks. Although from what I read, you generally don't want to max out your credit limit /spend up to the limit right?

 

[Vague]

Everyone that uses debit is nuts.

I put everything on the chase card we have, get 1-5% cash back depending on the purchase, and get a $50-150 check in the mail every few months for doing nothing but spending what I have always spent, just funnel all bills through the chase card.

Balance paid off in full every statement (usually more often like weekly but it doesn't matter) and I've never had fees before.

Almost a thousand dollars a year in cash back because all our groceries and utilities are trough the credit card. HELLO? Why would you ever use debit!!!

 

[Community Forum]

Almost a thousand dollars a year in cash back because all our groceries and utilities are trough the credit card. HELLO? Why would you ever use debit!!!

Maybe because someone's credit history is not so good, and the only cards they qualify for have an annual fee, tiny credit limit, and an ass-rape interest rate?

 

[Big-E]

Weird. At least in Toronto, debit cards are the bee's knees. I rather use debit (I think it allows for more financial control) than credit, although I do have two credit cards (should dump one of them soon).

Canadians use the most debit cards in the world. It is something like over half of all transactions are done with debit here. I think we are an anomaly.

 

[Dr. Kitty Muffins]

I can't why any idiot in Washington thought this was a good idea. Way to fuck up the economy during a recession, guys!

 

[DjangoReinhardt]

Interesting thread.

I'm actually involved with this industry up north, and I can say that noting beats using credit cards and paying them off every month from a consumer's perspective. There are often rewards programs, and you build credit. Debit card use also has downsides; some banking plans have a limit on POS purchases before you start getting charged fees, you may go into overdraft (which does nasty things to your credit and has fees), and you forfeit those reward programs.

If you aren't sure that you have the discipline to pay off your credit cards every month, then don't use them. If you are responsible enough to make it happen, then they are a better choice for consumers.

Amen, I love credit cards.

Credit = I am paid 1-5% of each purchase I make to take an interest-free loan, receive better fraud protection, receive additional bonuses like extended warranties or price protection, and keep money in my bank account longer where it accrues interest.

 

[CrankyJay]

Hm, I see. I have been looking at the Amazon one, just because I shop there so often. Thanks. Although from what I read, you generally don't want to max out your credit limit /spend up to the limit right?

Right. Or if you do just pay it off right away. Part of your credit score takes a look at your balance/credit limit ratio.

 

[JGS]

It is unrealistic to expect that. It will be factored in when deciding on price increases in the future but that's it. Something similar happened in Canada when the GST dropped from 7% to 5%, all the businesses that had a "tax included" price model just kept the extra 2%. Some people bitched but people don't think. Did they expect chocolate bars in vending machines to go from $1.25 to $1.23 or something?

I agree which is why I'm not hopeful of this law helping consumers. However, i also don't think it will stem inflation too much. Maybe when debit transaction account for the majority of ALL transactions, but until then, merchant to merchant still rules and those prices are on a non-debit system meaning the prices are based on that too.

The retailers make more money basically, which is fine since this is really a battle between industries. My opinion remains though that it is better to help your bank have a profit than it is for the retailer.

 

[Tarazet]

$50 dollar limit?

Oh man Wal-mart would be so mad. It's going to be fun to see how they respond to something like that.

popcorn.gif

Wal-Mart folks don't have debit cards.. they pay cash because all their credit cards got sent to collections.

 

[bean breath]

Cell phone NFC chip future?

 

[JGS]

Wal-Mart folks don't have debit cards.. they pay cash because all their credit cards got sent to collections.

idk, we make tons of money in overdraft fees thanks to Walmart purchases- especially aroind Black Friday.

The thing that gets you denied for a debit card is being charged off at another bank for overdrawing a checking account. We won't open a checking account for you (Very few will). No checking account, no debit card.

 

[gkryhewy]

Everyone that uses debit is nuts.

I put everything on the chase card we have, get 1-5% cash back depending on the purchase, and get a $50-150 check in the mail every few months for doing nothing but spending what I have always spent, just funnel all bills through the chase card.

Balance paid off in full every statement (usually more often like weekly but it doesn't matter) and I've never had fees before.

Almost a thousand dollars a year in cash back because all our groceries and utilities are trough the credit card. HELLO? Why would you ever use debit!!!

I'm with this guy.

 

[WickedAngel]

Everyone that uses debit is nuts.

I put everything on the chase card we have, get 1-5% cash back depending on the purchase, and get a $50-150 check in the mail every few months for doing nothing but spending what I have always spent, just funnel all bills through the chase card.

Balance paid off in full every statement (usually more often like weekly but it doesn't matter) and I've never had fees before.

Almost a thousand dollars a year in cash back because all our groceries and utilities are trough the credit card. HELLO? Why would you ever use debit!!!

Anyone who thinks that incentives like that will remain when/if debit cards are gimped is nuts.

 

[Wthermans]

Anyone who thinks that incentives like that will remain when/if debit cards are gimped is nuts.

True debit purchases make up a very small portion of transactions. Rewards cards naturally carry a higher rate for the merchant (which causes the merchant to subsidize a large portion of the rewards).

 

[justin.au]

This thread is amazing.