But there’s more. From a legal perspective (in the US) the credit card issuers are required to offer you a lot more protection against fraud than the debit card issuers are.
Simplifying mightily, if somebody steals your info and buys something with your credit card, the *bank *eats the loss. If somebody steals your info and buys something with your *debit *card, *you *eat the loss.
Some banks sometimes for competitive reasons will offer similar protections for debit as for credit. But they’re not required to. So most don’t.
Credit card for everything that accepts them without a ‘convenience fee’ that exceeds the cash back, or unless providers will offer a discount for cash bigger than the cash back. Check for significant purchases otherwise, unless the discount is only for paper cash.
Paper cash is down to very few small things for me otherwise; in some cases my wife uses it for somewhat bigger shared spending in her social group.
We virtually never use bank debit cards for anything but ATM withdrawal. We use a Target debit card with 5% discount at that store, which has apparently good security (now that they’ve been burned). Bank debit cards give no cash back, are less secure and it’s a PITA to write debit transactions into check record one by one.
It’s probably true that CC use leads to more spending than debit, check or cash but IME on financial frugality oriented message boards the super frugals seem to ignore that if you spend $1k more, you get $1k more worth of goods and services. Seldom is it literally pissing money away to spend more. The question is whether you can afford not to worry about it. Fortunately we can.
I’m pretty random, when it comes to credit and debit cards. I get benefits from both (recently collected $200 Nordstroms gift card with my debit card points, and airline miles for most of my credit cards) I’ll use credit for most restaurant meals, and debit for groceries and gas. I write checks to pay some bills, and bank on-line bill pay to pay others. I’m a bit too much of a dinosaur to venture into the land of Paypal and ApplePay.
I use cash for morning espresso stop, and most smaller purchases. (Oh, don’t tell anyone, but we pay the guy who does our yard work in cash too.)
Yes, that too, and some other reasons as well. Imagine fighting with your bank about your debit card being (physically) stolen and trying to explain that it wasn’t you using it even though your correct PIN was being typed in.
But, in the end, whatever the reason, it still comes down to the fact that if my card (or card number) is being stolen, I’d much rather have by credit card balance run up than my actual money run down.
Credit card for almost everything, to the point where I pay several bills through my credit card.
I don’t pay any interest as I don’t carry a balance and I enjoy the benefits of a couple of different reward types. I direct my purchases to a particular card depending on my plans for reward points.
I rarely have more than change in my wallet but I keep $20 or so in a drawer at home for buying stuff from school kids and after a horrible experience during the blackout of 2003 I also keep $200 in cash which I do not touch ever.
That’s how the CC companies charge merchants. Usually a minimum fee to cover very small purchases but a percentage of the total and 2.5% is not unreasonable.
People get this idea because on a practical basis, there is no difference between a discount for cash or an extra charge for credit. It’s a matter of framing and defining the “regular price” , but either way, you pay more when paying by credit and less when paying by cash.
It was mostly gas stations, but I’ve seen places that offered say a 3% discount for cash on merchandise and services and I even remember a catalog that offered the discount if you paid by check rather than credit card.
To answer the question in the OP - cash for small purchases , like a bottle of water or a soda or even a single meal at a fast-food restaurant. Either a credit or debit card for almost anything else.
