More and more people are deciding to use their debit cards rather than their credit cards, which is an issue that I addressed in an earlier post. In my previous post, I discussed the fact of this current trend being odd to me since credit cards offer so many perks that debit cards do not, including extended warranties and purchase protection.
It’s really pretty unfathomable to me that more people are using debit cards than credit cards. I suppose it is an attempt by these people to stay out of debt, which is certainly commendable, but you can still use a credit card and avoid falling into credit card debt.
Advocates of using a debit card over a credit card say that debit cards are better because it makes it easier to budget. I disagree. I don’t see any reason why it should be more difficult to budget with a credit card than it is with a debit card. In fact, you can keep track of your credit card spending in just the same way as you can keep track of your expenditures with a debit card. You can even use a check register to keep tabs on your monthly spending in order to make sure you have enough money in your checking account at the end of the month to pay off your bill.
For me, there are more risks associated with using a debit card than with a credit card. For example, if you forget to write down a purchase that you made with your debit card, you could be looking at a number of fees for overdrawing your account. If you forget to write something down that you purchased with your credit card, on the other hand, that amount can float until next month if necessary. The finance charges associated with overspending $50 and paying it next month will be far less than the fees your bank will hit you with when you overdraw your account.
In addition, some retailers actually charge a fee when you use a debit card rather than a credit card to make your purchases. Furthermore, you can’t simply stop payment if you are unhappy with goods or services when you make a purchase with a debit card, which is a powerful tool consumers have when paying with a credit card.
Experts have reported that the increased use of debit cards over credit cards has also lead to an increase in fraud. This is because debit card users do not have the same amount of protection as those that use a credit card.
This can really bring about a hard financial blow to debit card users, especially since they have to report fraudulent activity within two days after it occurs in order to qualify for the $50 limit on repayment of unauthorized charges that credit card users enjoy. In fact, if debit card holders fail to report the unauthorized charges within these two days, they might be held responsible for $500 of the purchases. If they wait more than 60 days, they might not get reimbursed at all.
Visa and Mastercard both claim to have policies to treat debit card users and credit card users in the same manner. While this may be true, debit card users are out of the cash that was taken from them until the fraud investigation is complete. This can really put a pinch on the finances.
Considering that there are so many reward credit cards out there that will pay you pretty well for using their cards, and will result in nothing but profit if you pay your balance in full each month, I really don’t understand why so many people are still choosing to use debit cards.
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