I use a debit card because it’s easier than paying a credit card bill. Life is risky. Knock on wood.
I have a debit card attached to my checking account. Usually, though, I pay with a check or a credit card. The exception is the store I work at, where I will sometimes use the debit card to get cash back with a purchase. If that store gets hacked they’ll get more than just my bank account anyway.
My savings and credit card are at a completely different bank than my debit/checking. I keep enough in checking to cover the monthly bills and no more, so the vast majority of my money is in my savings account, which I can access in 48 hours or less (closed on Sunday and after business hours) and meanwhile I still have my credit card.
In the event of zombie apocalypse I have canned goods and a crossbow.
You can always get a pre-paid or secured credit card with a bad credit history.
Think of it this way…
You don’t give your bank account info to the Water Company and let them charge you directly for every gallon of water you use as you use it, right? You might be ok doing it this way but what happens when your neighbor sneaks up and connects their sprinkler system to your spigot without you knowing? Or fills their pool? Or even just steals a bucket of water? It’ll be a mess to sort out with the water company and while you’re waiting to sort it out, your bank account is still down the amount charged for all that water and your mortgage is due.
Instead what happens is the water company keeps a running tab of all the water you used for a month. You review the bill and when you agree to the usage, you send them their money and you’re square for the month. If there’s an issue with stealing water somehow, you note it on the usage part of the bill, you work it out with the water company, and you end up paying the amount you owe for real.
Debit cards work like the first example. Every dollar you spend comes right out of your bank account directly. If there’s fraudulent activity, money still comes out of your bank account. That money’s gone, even if you catch it, while you dispute it, and hope it gets put back into your account by the time the mortgage is due. There’s a direct line from your debit card (outdoor spigot) to your bank account.
Credit cards work just like your monthly metered water bill. You owe the total amount of money you used over the month, look at the bill, agree to the usage and pay it off. If there’s a disputed or fraudulent charge, the money is out of the credit card bank’s stash, not yours. You only end up having money taken out of your bank that you actually agree to have spent. You’ve still got outside access to your credit (credit card fraud) but not to your bank account.
I don’t know why people freak out about credit cards like they couldn’t possibly only charge what they can afford. You don’t use more water than you can afford. You don’t use more electricity, natural gas or propane than you can afford. Just because you have an account with the water company you don’t turn on the taps just for funzies and then freak out at the end of the month because you owe more than you can pay.
Maybe you are weak in some aspects of your life and you can’t control how much you drink, eat, gamble, etc. But there are tons of people out there who can control all of this stuff in their lives but have been told “you’ll lose all control of spending when it comes to credit cards!” and never get one, or are afraid to use one, or never got good advice on how to properly use one, and they’re walking around with low/bad credit and making themselves vulnerable by insisting they only use their debit card.
I guess for however dumbfounded people are about not using debit cards (I’ve never had one in 25+ years of banking) I’m just as dumbfounded on the instance on using one.
A debit/credit card gives you convenience (money comes straight from your account), but also few-to-none of the protections of a pure credit card. So, if a potential thief gets hold of it, they can drain your bank account with just a faked signature (or in many places, nothing at all)
I do have a pure debit card (sometimes called an “ATM card.” No VISA or Mastercard branding). It can’t be used without a PIN (and can’t be used in most places at all. If there’s nowhere to enter a PIN, you’re not going to be able to use this card). So, while it is tied to my account, a thief would need to guess my PIN in order to be able to do anything. I don’t keep my PIN in my wallet.
It’s useful for getting cash (without extra charges). I think all of my credit cards will give me a cash advance, but they’ll charge extra for that.
Your personal experience is less than relevant when payment card fraud is well-documented and know to be common. While consumers are largely shielded from liability, having an account frozen while the bank sorts thing out is a hell of a lot more convenient when it’s the bank’s money (credit) instead of my money (debit).
Tacking on to this one…
Had a customer who had her debit card stolen/hacked at the end of the month who ran up a bunch of fees, all from her payees, not from the institution that issued her debit card (where I worked). Paid monthly, she had just paid all of her monthly bills - rent/mortgage, car, insurance, utilities, etc. & her card was stolen/compromised in the 24/48 hrs between when she wrote those checks/submitted bill pays & they cleared. I offered to write her a “To whom it may concern” letter stating that her acct was hacked & to please reverse any related fees & penalties; however, those were not our charges nor were those fees our fault therefore I couldn’t compensate her for them.
Most creditors give you one ‘free pass’ per year. If you were legitimately late paying your bill six months ago, you’ve already used up your free pass & they’ll charge you both late & bounce fees now. If this is your free pass then when you accidentally forget to pay the bill, maybe because you’re on vacation in the winter, you’ll incur a late fee then instead of getting it waived.
Personally, I don’t have a debit card; I have an ATM-only card & credit cards because unlike an ATM-only card, a debit card can be used without a PIN if someone gets it (or your number, like a skimmer) & you don’t realize it.
I have never fully trusted Debit cards. I never liked that if someone ever got access to mine even if I got it straightened out my account could be emptied while I worked on fixing it. I have an ATM card which is kind of like a debit card but only works in ATMs so I can get cash and that is all I need (plus my credit cards).
While the risk of having an debit card compromised is low, the hassle factor is huge if it does happen. While a credit card may offer the best protection from these hassles, having backup accounts in place would be helpful. So having a separate account is good, but I would have a separate account at a different financial institution. Having accounts in place with resilientcy in mind is good.
One issue with that though is that you need to be vigilant about not letting your backup account(s) go dormant. I found out that my credit union would happily send me a periodic statements for one of my small savings account without bothering to even once mention on those statements that the account was dormant for inactivity.
Visa and Mastercard now provide basically identical protection for debit cards, you won’t be on the hook for the fraud. The issue is that you may be out of money in your account while they investigate the fraud, and paying rent etc. doesn’t often take cards.
I only use debit if I need cash or in a rare business that doesn’t take credit. Not strictly for fraud reasons - I also rotate cards for various rewards categories. If I were a poor budgetter, I might avoid credit.
I have gotten my checking (presumably via debit) compromised twice. In both cases the bank caught it before I did.
As an added bonus, I recently had to submit bank statements and would feel uncomfortable sharing my purchases with a stranger. But my checking account is really only ATM transactions, bill pay, direct debits, etc. so I’m not revealing much personal info.
I tend to use the CC for everything over the debit card, but not because of any security concerns, it’s the simple fact that my CC gives me back 2% on everything I buy; my debit card gives me back jack shit.
our consumer columnist recommended that you establish a separate bank account for your debit card so your main account is safe
I have an account in a US bank and have a bank/debit card. Since I don’t live in the US, they won’t give me a credit card and so I use the debit card, reluctantly. I wish there were a way to avoid it, but if there is I don’t know it. Otherwise, I never use debit cards except to get money out of my accounts.
I don’t recommend that, unless that account is at a separate bank altogether. Often banks (especially smaller ones) see all your accounts as linked, and will auto-transfer funds from another account to avoid overdraft fees “as a service to you, our valued customer.”
As someone with over 20 years in banking - I use a credit card. The cc companies don’t pay charges immediately, so fraudulent charges are a minor hassle; they basically notify the vendor they won’t be paying the bill. That’s much simpler than trying to recover money from someone. I put everything on my credit card, and just pay that off every month.
I haven’t used a debit card since the 1980s and 1990s — they’re sooooo 20th century!
I only use a CC. I like the protection they offer me, Visa and MC both.
For those regularly using a DC, that’s great that you’ve been fortunate. You might never have a problem but if you do, your savings and liquid reserves might be gone while you’re fixing the problem.
My store’s credit card sales are deposited into our bank account within 24-28 hours (depending on a few factors). Maybe not ‘immediately’, but it’s not that they sit on the money for two weeks.
They have also never notified us that they simply won’t be depositing some of our money. What they may do is notify us that someone is disputing a charge with our business, give us the details and either request some type of proof or ask for our side of a story. In all my years, I’ve never had a dispute come up because someone used a stolen card, but it’s also very possible a stolen card has never been used at my store.
And, with that, even if someone does use a stolen card at my store or online, if I follow their guidelines, I’ll still get paid.
You have to remember, if merchants didn’t get paid for unknowingly accepting a stolen card, prices would skyrocket. Can you imagine how much gas would be if the all those fraudulent charges at pumps were passed on to the the consumer?* If that was the case, it wouldn’t surprise me if some gas stations offered a significant discount, but didn’t accept credit cards.
*And, yes, I know all those charges do eventually make their way to the consumer, but they’re spread more more thinly than if each store was on the hook for fraud (that they had no reasonable way of detecting) at their location.
I use credit cards and cash. I have a debit card but have only used it at ATMs to get cash.
For American debit cards yes. For the rest of the planet debit cards are chip and pin / contactless and very much 21st century.
I haven’t had an issue with any of my cards debit or credit since they went to chip and pin plus all the other security measures banks have added such as end-to-end encryption and automated fraud tracking and prevention etc.
Credit cards make it too easy to run up debt if you’re part of the working poor. It’s easy to say, “Oh, I’ll just pay it off at the end of the month.” But for some of us, one unexpected trip to the vet, for example, means the money may not be there at the end of the month.
Debit cards are fairly safe if you use them only at ATMs on bank property, and at only one trusted location, if possible. You also should keep checking your balances often. If you report a theft immediately, the bank will refund your loss, less a service fee of perhaps fifty dollars or so.
I usually pay cash for all transactions. What bothers me is now there are places that will not accept cash. Oooooh, they are so cutting edge and cool. I try to avoid those places because obviously they hate the working poor like me.
The only card I have is my debit card and I use it everywhere. Cash is only used for coffee, bus fares and laundry.