Non-Debt Credit Card

[David1980]

I think the protection of the law in losses on a credit card is overblown and not a concern to anyone who uses reasonable care in the use of either card.

Realistically, any internet purchase would be risky. Especially if you purchase from smaller internet websites. Speaking for myself, I throw caution to the wind and will input my credit card information freely on all sorts of different sites, as long as it's an encrypted connection (the little "lock" icon) and I don't get bad vibes. But you always have the risk the company or even an employee at the company will take the card data and use it. Which has happened to me.

I just look at it as zero downsides, lots of upsides. I don't want to be super careful with my card - I have it so I can use it. I use it on the internet. I let people take it at restaurants to charge my meal. And I risk nothing, thanks to legal protection. Win-win!

[taxmandan]

Would you mind explaining your reasoning for this approach?

(Especially since you apparently have no aversion to doing so with a debit card.)
(snip)
And as for the card "walking away" in a restaurant: The vast majority of all restaurants I visit have that as a common practice for paying for a meal, except for places like McDonalds. Such an approach seems a bit paranoid and might well create some "anxious moments" with the wait staff. Add more to this discussion.

FE

I have one credit card and only for the purpose of unexpected emergency needs, not for everyday use. In fact it's sitting in my vault so I have to make a significant effort to go get it to use. Like I said, I've used a debit card since the early 1990s and never had an issue with lost/stolen activity. I think the protection of the law in losses on a credit card is overblown and not a concern to anyone who uses reasonable care in the use of either card.

>"Such an approach seems a bit paranoid and might well create some "anxious moments" with the wait staff."

Not really, '—>Visa reports that more credit card information is stolen at restaurants than at any other type of business. 40% of all credit card information theft is traced back to restaurants.' (The Consumerist) http://con.st/248413 Now that includes hackers getting in to the restaurants computer system, not just the wait staff but still....it's definitely a vulnerable location for using either type of card. I pay cash when eating out, there's always an ATM at a CU somewhere enroute to the restaurant if I'm without cash at the moment.

Different strokes for different folks.

[FEDUKE404]

Keeping everything separate

... Can't recall the last time I wrote out a paper check, and I would never use a credit card for groceries or other small personal spending....

Would you mind explaining your reasoning for this approach?

(Especially since you apparently have no aversion to doing so with a debit card.)

Assuming you pay the full balance monthly, I just don't follow the inherent logic. (Well, the same with small/large charges or maintaining separate low risk/high risk bank accounts.) As a holder of two, and only two, credit cards for the last way too many years, I just don't have the time or mindset to "pigeon hole" all of my numerous purchases based upon extraneous criteria. A possible exception would be if I wanted a separate "business" card, as others here have already noted.

Most folks admit your monetary exposure is, in the long run, equal with debit/credit cards (with proper notification of unauthorized use) but I do see a greater risk with a debit card which can draw down funds in a bank account and then subsequent valid payments (think mortgage, taxes) from that same account might unexpectedly bounce. In the end you will get the funds replaced, but in the interim you might be writing a lot of letters re the "bad checks."

And as for the card "walking away" in a restaurant: The vast majority of all restaurants I visit have that as a common practice for paying for a meal, except for places like McDonalds. Such an approach seems a bit paranoid and might well create some "anxious moments" with the wait staff. Add more to this discussion.

FE

[equinecpa]

7.Also many credit cards double the warranty of items purchased with the credit card. I never buy extended warranties because most often my credit card will give me at least the coverage offered by the extended warranty for no cost at all.

8. The ability to create a temporary card # for online purchases so you don't have to fret about purchasing from an unsecure/unknown site.

[taxmandan]

Another need for a credit card is to rent a car, Enterprise, etal. won't accept a debit card for rentals, almost derailed our last Hawaii trip because I didn't know that and planned to use my debit card.

Sounds like I'm in the minority here, but I've used a debit card for close to 20 years now with no issues re: lost/stolen card, charge backs etc. Can't recall the last time I wrote out a paper check, and I would never use a credit card for groceries or other small personal spending. Seems like many folks have a major fear of the lack of limits on liability with a debit card that is stolen or lost, I just handle my card like its' a 16 oz. gold bar. I don't ever give a card, cc or debit to someone who then walks away with it to ring up the bill, like many restaurants do these days.

One thing I do for on-line purchases is to use a debt card from a separate CU account that I use solely for ordering on-line. I only put enough money in the account to cover each purchase at the time I buy and would never use my primary account number on-line. Just another method to safe guard my finances. Again, I've never had a problem with that account even though I've used it with dozens of on-line merchanats.

[DonPriebe]

Old Joke

... Earlier this year my wife's credit union Visa card was stolen ...

But I didn't report it because the thief spent less than my wife would have.

[taxxcpa]

I use Discover card for all business-related purchases and a Chase Freedom card for non-business purchases. I get 1% to 5% rebate on all purchases on these cards.

It simplifies my record-keeping since I just enter the Chase card as "draw" and don't bother scanning it.

[S T]

Debit Cards

I for one (as well as my husband) are not believers in the "Debit Card" and that exposure to theft, and identity fraud.

We carry some cash at all times - but primary purchases for groceries, gas, dept stores, etc are all on Credit Cards. I use one-two credit cards for business purchases, and receive some form of travel miles, or "cash back rewards"

A statement at the end of the month - match statement to receipts - pay at the end of the month - receive a print out from the Card Company, and I am done. Easy to go online track, monitor, and pay online.

The one or two disputes on the Credit Cards that I have had - have been no issue. I have had 3 occasions, where the credit card # was "hijacked" and the Bank actually called me (Fraud Dept) suspended the card and promptly re-issued and overnighted a new card. Card was never lost or stolen - Fraud Dept when questioned said it was just a random incident - These "hijackers" have some type of electronics to produce random credit card numbers - then make the attempt to try the charges to see if the charges will be processed. One was a $ 5,000 cash advance in Las Vegas along with Gas Charges on the way from an area that we didn't even live in, and the bank called me - before I even knew about it.

All was taken care of - and we did not incur any fees/charges.

Besides, I can obtain a 20 - 45 day "float" on my money - not that matters anymore with interest rates being so low.

Sandy

[joanmcq]

I'm another person that uses credit cards and pays them off monthly. I say 'all of the above', plus my business Discover card, for which I pay no annual fee, gives me 5% cash back on all office supplies, as well as a few other 'biz type' items. So all the paper, toner, the new scanner, envelopes and assorted stuff associated with my biz gets me 5% cash and all other stuff on the card gives me 1%. I keep biz and personal strictly separate.

Most of my personal cards offer more cash back on certain things at certain times. So which card I use for a given type of purchase depends on who is running the 2-5% special at that time (usually gas, hotels, travel, restaurants,etc).

Plus all of the above other reasons. Almost all debit cards now have a VISA charge ability, but I don't like the fact that they will allow almost unlimited access to my bank accounts should they be lost. For credit cards, most businesses in my area also request ID, which they don't for debit cards, which gives me added peace of mind.

[David1980]

Decent information found here:

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre04.shtm

Credit Card Loss or Fraudulent Charges (FCBA). Your maximum liability under federal law for unauthorized use of your credit card is $50. If you report the loss before your credit cards are used, the FCBA says the card issuer cannot hold you responsible for any unauthorized charges. If a thief uses your cards before you report them missing, the most you will owe for unauthorized charges is $50 per card. Also, if the loss involves your credit card number, but not the card itself, you have no liability for unauthorized use.

And for debit cards:

ATM or Debit Card Loss or Fraudulent Transfers (EFTA). Your liability under federal law for unauthorized use of your ATM or debit card depends on how quickly you report the loss. If you report an ATM or debit card missing before it's used without your permission, the EFTA says the card issuer cannot hold you responsible for any unauthorized transfers. If unauthorized use occurs before you report it, your liability under federal law depends on how quickly you report the loss.

For example, if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use. However, if you don't report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer.

There's more on that site. Just think of it this way: Unauthorized use on a credit card may reduce your available credit, but you're not out any money. Unauthorized use on a debit card may result in you losing money immediately until the bank credits you, and think about bounced checks, etc... You also have better protection / lower liability on a credit card.

It's a no brainer for me. Get a card with no annual fee. Pay it off in full each month. Your cost: $0. Benefits: Reduced liability, possibly cash-back bonuses, rental car insurance, improved credit score, etc...

Edit: Personally, I have been a victim of theft of a debit card number and the bank I was with at the time did nothing to credit the loss. I was out a little over $200 (it was like $800 egyptian). What's the maximum liability for unauthorized use of your debit card number? Had that been a credit card, under today's protections I would have had $0 liability by law.

[FEDUKE404]

Yup - not an ATM card!!

One more caveat: Do NOT under any circumstances use the credit card for cash advances. Trust me. You will get whacked.

And from the corner - a VERY loud A-MEN !!!

(Same goes for those little "checks" they send with your monthly statement - shred immediately or even better tell them to quit sending them to you!)

FE

[JohnH]

John, what happens if the dispute cannot be resolved? Who is on the hook?

Ron:
I can't answer that question. I've only had a half-dozen disputes in my lifetime and every one of them was settled to my satisfaction. One involved attempted identity theft, several were significant, and the most recent one was simply a matter of a stolen card.

Earlier this year my wife's credit union Visa card was stolen four days before we left for India. It is both a debit card and a credit card. If you enter a PIN it processes as a debit card, but if you tell the merchant it's a credit card, then that's how they process it. Either way, the money comes out of our checking account.

Not having the PIN, the thief ran a couple of small credit card charges just to see if it would work, then they hit WalMart and Best Buy for some bigger ticket items. Total charges within about 24 hours were around $800.

I noticed the odd activity, so I went into the credit union and they immediately blocked the account for all card transactions. I filed a police report, furnished the credit union a copy, signed a sworn statement that it was fraud, and they removed all the charges on a "provisional" basis. They still had some behind the scenes investigational work to do, but when we returned from our trip 2 weeks later, I had a letter saying the case was closed and the provisional charge-backs were permanent.

All that is to say that there is a "provisional" period in place while the issuer gets to the bottom of the matter. I don't know what would happen if the vendor won't cooperate or challenges the complaint.

We use different cards for travel, so this didn't affect our trip in any way. But it was reassuring to know we weren't on the hook for more than $50 at most.

[Burke]

My experience is that most often the cc company can resolve any disputes with the vendor if it is something you did not incur. When travelling overseas, I always book a rental car with a company based in the US. Once in Spain, I went to pick up a car for which I had a confirmation and the local office told me there were no cars for "that price." After some argument I took the car and paid what he was asking. When I returned home, I called the company based in Texas, explained the problem, referred them to my previously confirmed price on their website, and within 2 weeks I had a refund of the difference on my card.

One more caveat: Do NOT under any circumstances use the credit card for cash advances. Trust me. You will get whacked.

[FEDUKE404]

Random thoughts on credit cards

I have two credit (never debit!) cards. Balance is paid in full each month. I receive a minimum 1% cash rebate for all charges.....yeah, I even put college tuition on my credit card. Threatened to put a new car purchase on one until the dealer "did the math" and lowered the cash price.

Neither card comes with any fees....gotchas...whatever. But you better learn the rules, such as going over limit or late payment issues or "gotcha" will be an understatement.

You must never have had to rent an automobile or to make online travel reservations???? Virtually a required necessity to have a valid credit card.

As John mentioned, monthly/annual statements help with organizing and review of cash flow. I "write" less than six checks a year.....everything else is done via online bank pay or credit card.

There are other positives which most credit cards have (I don't use them enough) but they include warranty improvement, trip insurance issues, and other "fluff" for purchases made.

In the few rare instances where there has been a bogus/erroneous/duplicate charge, a phone call or two quickly resolved the problem. You also can get a one-time-use linked credit card number for things such as online purchases for a single merchant/event. Keeps your "real" number from rattling around with lesser known merchants.

Of course, all of this may change as banks/vendors try to recoup their expenses....but the card issuers still make plenty of money from my own purchases.

FE

[Nashville]

3) Your #2 is no small matter. If you charge for a product or service and the vendor fails to deliver, you can initiate a charge-back process with the credit card issuer. If you pay by check, cash, or credit card, your recourse is usually limited to taking legal action against the vendor. If I get into a dispute, I sure hope it's for something I've charged to a credit card.

John, what happens if the dispute cannot be resolved? Who is on the hook?