Comment by wbc
4 years ago
This whole thing is just so regressive. Every time I use my 2% back card, I know some less privileged folks paying cash gets shafted.
I wish everyone would use just debit cards over ccs, faster than trying to count out coins, less fees.
I agree with the less privileged folks getting shafted statement, but for the rest:
I am 100% unwilling to use my debit card for any purchases.
Why?
Fraud. If I pay with cash, then fraud amounts to getting actually robbed. Identity theft and account compromising is literally impossible. If I pay with credit, it is MASSIVELY simple to get that fixed, and it becomes the cc company's problem.
With a debit card, any issues immediately become my issue, because the money is out of my account in that moment. Not good.
> If I pay with cash, then fraud amounts to getting actually robbed.
Getting robbed cash in your wallet you are 100% out of the money. But fraud on a debit card must be made whole by the bank within 30-60 days per “Regulation E”, which offers similar protections to debit cards that credit cards receive under “Regulation Z”
And using a credit card the money never comes out of my account.
This is a popular take, but I found relatively little difference in how my bank handles CC and debit card fraud. In both cases, they credited the disputed amount to me right away.
Not that it buys you much; there's plenty of small / specialty merchants who might offer you a discount for paying with cash or check, but they treat credit and debit the same.
> This is a popular take, but I found relatively little difference in how my bank handles CC and debit card fraud. In both cases, they credited the disputed amount to me right away.
There is indeed usually not much difference in how banks handle the fraud on credit cards and debit cards.
But it is vital to understand that with credit cards, you are off the hook on fraud due to regulations (in the USA, don't know other countries laws). With debit cards, you're probably off the hook on fraud only because the bank wants to be nice in the name of customer service (usually and only up to a point).
So with debit card fraud the bank might decide they don't really want to keep you as a customer and things become your problem. With a credit card it'll never be your problem because the regulations make it so.
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On my credit card I've reported fraud and been reimbursed immediately. On my debit card there's a lot more hassle. I can stop a transaction and I can report the fraud, but it takes a long time to resolve (usually weeks). They're two different systems entirely. For instance, I signed up for a single month of the LA Times as part of a charity drive. They continued billing me for over a year which is clearly fraud. The best I could do was stop the transaction that month and I'd have to contact them for reimbursement before my bank would step in. Basically, "try to do business with the fraudsters first, if they refuse we might help."
For me it's this, plus it's not ADHD friendly.
It acts as a capacitor/battery for my money. My spending fluctuates, but my income is steady.
Using debit cards means that you need to keep a sufficient balance on a zero interest checking account in order to make transactions.
Using credit cards allows you to keep close to a zero checking account balance and manage your own cash flow, since credit card bill dates are deterministic.
Why would anybody want to keep _any_ amount of money in a non-interest bearing checking account right now especially when the risk free rate of interest (US treasury bills / equivalent money market funds invested in US treasuries) yields 4.00%+ APY now?
> Using debit cards means that you need to keep a sufficient balance on a zero interest checking account in order to make transactions.
Many banks allow linking a savings account to a checking account as a backup funding source.
> Why would anybody want to keep _any_ amount of money in a non-interest bearing checking account right now
Conversely, why would any credit card issuer give you an interest-free loan for a month in a world of 4.00%+ risk-free APYs?
Leaving aside all concerns of repayment risk, somebody is paying for your interest-free loan already.
Depending on how you view it, that's either yourself (via 2-3% of credit card fees baked into all retail prices) or other credit card users that don't pay their credit card bills in full every month, or a combination of both.
> Many banks allow linking a savings account to a checking account as a backup funding source.
And the average American can’t handle a $400 emergency. They don’t have a savings account with thousands of dollars
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Or you know, completely disconnect the need for cards. My time in india is so much fun since I can walk out of my house with just my phone in hand knowing I can pay using QR codes directly and not worry about accounts or charges.
You can do the same thing in the US with Apple Pay and the like. They're pretty widely accepted nowadays.
I don't really see how Apple Pay backed by a credit card or debit card is any different from how a QR code system would work in practice.
Big difference is QR code based payments in india are absolutely free, no processor is allowed to charge a fee for such payments. In fact that’s the fundamental crux of what we are talking about here so I’m not sure why Apple Pay working is relevant unless it has no hidden fees to the merchant.
And how is that any different? Money is still coming out of your account electronically. In the US, I can walk around with just my Watch to pay.
No hidden fees to anyone.
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How does that work with fraud? I noticed that everyone accepts those QR codes.
I will say though as a tourist who was visiting my family but doesn't have a bank account, those QR codes are pretty nice but completely inaccessible to everyone outside of India :/
Same issue in Thailand. QR accepted absolutely everywhere, _but_ tourists can’t really use it (TrueMoney is supposedly a solution but it didn’t end up working, can’t remember why). Cash is so painful as many vendors flat out refuse large notes. I wish someone would just set up a service where I can link my CC to pay via QRs. I’d pay a 3% fee to avoid the inconvenience of cash.
I think you may be forgetting about people who do not have a bank account.
Most of my points come from spending on airlines and hotels.