Debit or credit?
You’ve heard the phrase about a million times right before you swipe your card through those Point of Sale (POS) terminal at the grocery or department store. (By the way, why the crap can’t those things all work the same way? I have to guess the order of operation at each retailer. Do I swipe then press credit? Do I tell the clerk what I’m using first? Do I press cancel to use credit? You have two choices in this situation. (1) Ask the clerk, “what do I do?” and look like an idiot. (2) Take a guess, screw up the transaction, and get the eye-roll and sigh from the clerk and look like an idiot. Isn’t there some sort of POS terminal governing body?)
But that’s not the point of this post. What I’m really asking is, do you use a debit card for most or all of your everyday purchases or do you charge everything on a rewards credit card? Me, I’m a debit card man. I’ve heard from readers and other PF bloggers that the credit card is definitely the way to go. I see a couple of reasons to go with both.
Pro-debit:
- Purchase comes out of your account immediately. This can be good and bad depending on how you look at it. Obviously you have a better idea of how much money you have in your account if it comes right out. On the down side, you are losing the (admittedly miniscule) interest on that money.
- It’s much harder to spend more money than you have.
Pro-credit:
- You get the 20 days interest before the bill is due.
- You get a complete list of all purchases made during the month in one place.
- You get rewards (assuming you use a rewards card, and you should). (If you use my kick-ass bank, USAA, you get cash back for using your debit card!)
- If you use Mastercard/VISA, you get certain insurance protections for buying stuff with their card.
Toss up:
- Returns are the same for either.
- Assuming your card is Mastercard/VISA branded, you get their liability protection for both types of cards.
- You still have a fist full of receipts to do something with. (Five cent nickel has a good post asking how to deal with receipts. He’s also running a contest giving away some cool prices, so check it out)
Like I said, we use the debit card. I’d like to hear which method readers use and if I’ve missed any great reasons to do one of the other.
May 3rd, 2007 at 11:28 am
I’m for the credit card, just for the reasons you stated above:
* Delayed payment….allows me more flexibility to match paydays with purchases.
* List of purchases…has been invaluable for helping budgetting.
* Rewards…if you pay off your card faithfully, the reward can be…well…rewarding. We make over $300 a year even trying.
* Insurance…I haven’t had to use it, but it’s nice to know that it’s an option.
Once you master the Credit Card mind…and train yourself to think of them as debit cards…then they are great, convenient ways of managing purchases.
May 4th, 2007 at 6:12 am
Anniversary Giveaway, Update #3…
Time for another update on the anniversary giveaway… There are now well over 300 comments on the original contest announcement, and I’ve received an additional four entries from bloggers who’ve posted articles highlighting one of my past posts or…
May 4th, 2007 at 12:42 pm
Credit, always! In fact, when I had to use my debit card for the first time ever at Costco last week (they only take American Express), I almost couldn’t handle it. I actually always have asked banks to give me plain old ATM cards instead of debit cards.
Why? Well, the main reason is I feel very insecure having a card directly linked to my bank accounts that allows for purchases. A year ago, I discovered how once money leaves your account, it’s very hard to get it back. I had a martial arts place withdraw $800 in a span of three days, without my authorization, and the bank could do nothing!
It gives me peace of mind when I pay with credit and know that, if worse comes to worse, I can contest the charge (though I’ve luckily avoided that so far).
Besides that, the 5% grocery / gas rewards I get on my card, and the easy online access, make it very worthwhile to me.
May 4th, 2007 at 6:50 pm
May 6th, 2007 at 4:21 am
I’m wondering if there is a right answer for this, or a deciding element that would make it clear which option is better.
As for me, I’m a credit guy.
September 28th, 2007 at 10:20 am
Mutual Funds and Market Research…
I couldn’t understand some parts of this article, but it sounds interesting…
October 23rd, 2007 at 9:23 pm
My question is: Why does the clerk even need to ask that question? The card reader itself (every single one that I have ever used) requires you to choose debit or credit. Is there some law requiring every single store clerk to interrupt me while I’m trying to use the card reader only to ask me a question that I’ve already indicated by pushing a button? What gives?
October 24th, 2007 at 7:47 am
@ James - You got me. I’ve long since left my clerking days so I’m not sure exactly how they work from the clerk’s point of view.