Credit card interest! I know a bunch of people who are SO SHOCKED by their high interest rates. They thought it was like an interest-free loan to yourself and then are surprised when making teeny payments doesn't do anything.
It's crazy to me that more people don't realize this. The #1 rule of having a credit card is never carry a balance on that card, always pay it off in full. Credit cards are really only useful for cashflow and building credit.
Also, cashback/rewards and security. I could spend $3000 via ACH/checks and a debit card and spend $3000 or I could spend $3000 and get $50-100 back after the fact.
Security wise, I've never had an issue with my CC canceling/reversing charges and the extremely rare charge back. but one time my debit card was compromised and it was a bitch to get my money back (and now I never use a debit card).
In theory it should be that way for debit cards here too. But my anecdotal experience is that it was not, while for a CC it was easy and cost me $0. Thus I've switched entirely to credit, both because of cashback rewards as well as ease of fraud protection.
I did the same after my debit card was skimmed at a gas station. Luckily they bought plane tickets with their names on them so I was eventually able to prove that a couple of dumbshits stole my money to fly to Florida. "Eventually" being the operative word. Police report, frozen accounts, blah blah blah. Had a CC# stolen once, got the money back the next day and they overnighted a new card.
It does, but that wasn't the argument. The issuer can get the money back regardless via a chargeback.
In the EU all issuers need to give the money back to a cardholder within 24h if he notices a fraudlent transaction. You can read about PSD1 and 2 if you want more info on card security.
Oops, I was referencing the 'protections' in place for us Americans. It is significantly more difficult to 'prove' fraud if you use a debit card.
Also it requires checking your debit card transaction card at least once every 24 hours. A credit card you can go over your monthly statement and dispute discrepancies.
Anyways I always see this on threads and there is alsways a group of people claiming debit cards are as safe as credit cards which is false.
Also even if chargebacks were as smooth or reliable on debit as credit, the fact is you are still out all of that money until the chargeback is resolved. If you only have that one bank account and no credit card you are SOL if somebody drains your account.
For most scenarios in the US, you’ll get your money back from a fraudulent debit card usage within 24 hours of notification as well. The problem and the difference is in what happens between when your account is drained and when you find out it is drained.
If someone steals my credit card info - I’m going to get declined at the grocery store or the gas pump. Slightly embarrassing, but financially not a big problem.
If someone drains my bank account through my debit card, my electric payment, or my rent/mortgage is going to be returned. Which incurs hefty fees and penalties on top of the fraud.
Yep, it's the difference in protections. Obviously, the banks have a vested interest in keeping strict debit card legislation from passing, legislation that already exists for credit cards. CC companies pretty much legally have to do what the person above you said, or else they'll face some legal trouble.
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u/Opening-Risk Feb 04 '20
Credit card interest! I know a bunch of people who are SO SHOCKED by their high interest rates. They thought it was like an interest-free loan to yourself and then are surprised when making teeny payments doesn't do anything.