In Conceivable - when I buy groceries, I can get $50 over the purchase price. I charge the entire total on my credit card, and pay the total every month.
I get to earn interest on the $50 until I pay my bill, as opposed to a debit card where the account is billed immediately.
Then, Discover gives me 1% or something back once or twice a year on the entire amount I charged - including any cash over purchases.
I talk to delinquent payers every day who don’t have a credit or a debit card or a checking (or savings) account. They apparently would rather hand over some obscene percentage of their paychecks to the money store/check cashing place than tie up the minimum balance required to maintain a bank account. Banks as I understand often have fairly high minimum balance requirements (last time I asked at a bank it was $200) but my credit union only requires $25. It makes absolutely no sense to me that these nitwits don’t understand that not being able to spend $25 of their money and getting their entire paycheck is way better than lining the pockets of Mister Money.
I use my debit card all the time. I also always immediately record the transaction in my check register. “Debit card” and “paper trail” are not necessarily mutually exclusive.
Those of you who don’t record debit transactions right away, how do you know what your account balance is? Do you just guess from statement to statement? Empty the receipts out of your pockets and tally it all up at the end of the day? Sounds scary to me.
Online banking. I use Quicken to keep track of the account.
I use my debit card for everything. I share a checkbook with my SO but it never leaves the house. About the only thing I use checks for anymore is my horse board.
Carrying one card is a lot easier than carrying a whole checkbook, and I think it is a lot faster - swipe the card, key in the PIN, done.
Yabbut, sometimes I’m out and about all day, making a zillion stops and swiping my debit card at each one. And my cash flow usually isn’t so generous that I can assume I won’t go over my balance. Do you just say to yourself, “OK, I’ve got $500 to spend today,” and keep a mental tally, or what?
Not being combative here – if this method works for you, fine; I understand that it works for a lot of people. But for me, it would be a recipe for disaster.
We keep a fairly large cush zone in the checking account (pet emergencies, appliance breakdowns, stuff like that), so most of the time I am sure I won’t go over the balance.
Then we sit down and go over the account a few times a month. we don’t really take that much cash out, so most of the stuff is a matter of “Did you buy something at XYZ last week?” Most transactions come through in a day or two, so it’s easy to figure out. The problem comes with checks, actually. Sometimes those can take a week or two to come through, and can screw things up.
Not the most technical, down-to-the-penny method, but it works.
More and more retailers (especially big ones like WalMart) “truncate” checks. What this means is the store reads the MICR numbers at the bottom of the check and transmits the routing and account info to their bank. Your check is destroyed at the store, or they’ll give it right back to you at the register, saving them the effort of shredding it later. My doctor’s office does this - even though I knew what check truncation was all about, it was surprising the first time around when they ran the check through a reader and gave it back to me with a transmittal receipt similar to what you’d get from a credit card sale.
Why do they do this? Primarily, they get the money immediately. Most retailers “close their batch” at the end of the day, but some do hourly batches, because they have so many transactions. A few months ago, I wrote a check at WalMart, and the funds posted out of my account before I got home three hours later. :eek: Also, their bank offers them a discount rate on the merchant services because their bank doesn’t have to mess with physically handling paper checks.
Since your check never leaves the store, any “paper trail” isn’t gona happen. Also, if a merchant truncates, it’s pretty hard to kite with them, especially if they do more than one bacth per day.
These are the same people who, rather than counting and rolling their spare change, will dump it into a Coinstar machine at the grocery store and give nice Mr. Coinstar Owner 8.9% of their money. I don’t get it…aren’t the people who are cashing in change the sort of people who need every penny?
Y’see, what you’ve got there is a check card, which is (I’ve discovered) what most people in the U.S. mean by “debit card”.
But I’m from Canada, and in Canada “debit card” is basically another word for your ATM card. You can’t use your signature to make a purchase with that kind of debit card; you have to use your PIN. We had debit cards for a few years in Canada before Visa started issuing check cards.
And check cards, I fully agree, are less secure than credit cards and debit cards put together. They combine the worst security features of the two, in fact.
Cashing one’s paycheck at a currency exchange is a rational decision for someone who knows he will never be able to consistently maintain a minimum balance or lacks the basic skills and discipline required to maintain a checkbook.
It would seem kind of dumb maybe for you or I to cash our paychecks at a currency exchange, but it makes a lot of sense to some folks of very limited resources who would get killed at a bank.
This is MomAvabeth’s excuse, too. I questioned her in the grocery store last week because she was writing a check - she said that she’d forget to write down a debit card purchase, but she always has the check duplicates when she’s doing her checkbook.
I use my debit card everywhere. It’s easier for me, I hate writing checks, and it takes the money out of my account immediately, so I know I no longer have it. And I hate to carry cash, so I try to pay for everything with a debit card.
Not to change the topic, but…
I had always done the counting and rolling of change, and I’d bring it to the bank every three months or so. It’s not like I hoard change or anything, but there’s a jar that collects the loose change, and it’s amazing how fast it fills up. So, I’d spend an hour or two of my time to roll the $60 or so, and I’d have a bit of extra pocket money, enough for a night out–dinner, whatever.
I used to also poo-poo the Coinstar. They do charge a fee (I think it’s 3% where I am, but even if it’s the 8.9% you said, I still feel the same way) for doing what is obviously quite easy to do myself. But I use it now. In my $60 example, let’s say, I paid a fee of $1.80 (or around $5 if it’s the percentage you say) for the convenience of using the machine. To save an hour or two of my time? For less than $2 (or even for $5)? Absolutely worth it. I think my time is worth more than a couple of bucks. Plus, I don’t need to get my hands all nasty from the dirt and filth that covers the coins.
So, it’s not like people who use Coinstar machines are unaware that the machine charges a fee. It’s just that their time is worth more to them than a couple of bucks might be. It’s the same thing as, for example, eating in a restaurant. Of course you could make the same pasta dinner for $2 at home, but you don’t want to; you want someone else to do the dirty work, and you don’t mind.
And also, “the ** sort of people ** who are cashing in change”? What do other people do? Throw it in the trash? It’s money!
Given a $50.00 pile of coins of which I’m guessing at least 40% will be pennies, higher if the coin pile is ever “raided” or the quarters are used for laundry or vending machines and such, you will have perhaps 40 rolls of pennies, a roll and a half of quarters, four plus rolls of dimes and two plus rolls of nickels.
Does it make sense to waste the time sorting and rolling nearly fifty rolls of coin and then waiting in line at a bank or grocery store customer service counter or spend the $4.45 and using the time doing whatever one wants?
Many people who need every penny spend more than $4.45 a week on lotto tickets, cigarettes and/or booze. $4.45 once in a blue moon to save some drudgery may not seem like much in such a context.
One other small negative I’ve noticed since using a check card rather than a check: as I write in each transaction (at the end of the day), while not using many actual checks, I’m filling up the check register way too fast. Lots of checks are left, so I am not ordering new ones. But the register fills up and I’m left with an imbalance. I wonder if you can just order the register without ordering checks…
Like I said, my credit union requires a $25 minimum deposit. Say they have a $500 paycheck. They can cash it at a currency exchange which will charge probably 10% and be out $50, or they can open a credit union account for $25 and be up $25 from the start. Then they never have to pay that $50 to Mister Money again. Don’t order checks and get the debit card, which will not allow them to spend more than they actually have, and even the most undisciplined person should be fine.
My credit union lets me cash in my loose change bucket for free too.
Actually, Orbifold, limiting onself in this way is evidence of fiscal responsibility, not fiscal irresponsibility. There are more optimal ways of controlling spending, of course, but this is in fact a voluntary self-limitation on spending, hence evidence of responsiblity. Irresponsibility would consist of using a credit card to overspend when one’s budget wouldn’t justify it.
One advantage of using a debit card over cash is that it prevents “fudge factor” from being a problem. Say you’re going to go out shopping and eat lunch out with the family, visit a couple of stores, maybe run by the video store to rent some movies. It’s hard to calculate how much money you’ll need beforehand, so the tendency is to throw in some “fudge factor” to cover your projected purchases with a little more than you really think you’ll need in case things cost more than you think they will.
With a debit card, you have no fudge factor. Saves money over the long run, since cash in hand tends to go bye-bye very easily.
In either case, you still have to keep track of your money. I just keep a mental tally of debit card purchases and then check in couple of times a week via online banking to make sure I’m on track.
Debit cards also carry no interest, as I understand it. The merchant pays the transaction fees. And you can fit debit cards in your wallet easily. Checkbooks are a pain to tote around.
Depends on your bank. My old bank in New Orleans started charging a similar fee for rolled coins and that’s WHEN you had an account there, they wouldn’t accept them if you didn’t have an account there. So it was just faster, easier, and cheaper to CoinStar em.
Online banking. I can log into my account anytime I want, get an up-to-the-minute balance and a statement that’s usually current and is seldom more than 2-3 days behind. And it shows me more information than a check register ever could.
For example, my ISP just charged my card, right? My online statement shows me the name of the company, where they’re located, and a phone number, which is great for those “Who in the heck is THAT?” moments.