Debit vs Credit Cards?

[PufPuf23]

Someone please inform DU (and me) about debit vs credit cards?

Are debit cards at risk because of the liquidity problem?

[AndyA]

1. Debit cards are tied directly to your checking account.

As long as you have the funds in that account to cover the charge, you should be OK.

Credit cards are tied to a line of credit, and could be a problem if the institution that issued them withdraws credit lines.

[Juneboarder]

5. So...

we should Charge! Charge! Charge! ASAP until those lines of credits are withdrawn?!?!?!

:think: :sarcasm:

[Occulus]

14. ...unless the institution issuing the credit is also the one that holds your account.

By 'account', I mean the checking/savings your debit card uses.

Mine's both- it's a debit and credit card. As soon as funds aren't available in the checking account, all charges become credit charges. Up until that point, I have a choice, but no matter which one I choose, if funds in the checking account are available, it comes from there, regardless of whether I tell the cashier "credit" or "debit".

I can even shop online with it, since it has a Mastercard logo. Talk about convenient.

IOW, the only difference, for me, is either signing a receipt (for a credit purchase) or putting in my PIN (for debit). If I choose the latter, I can get extra cash out, like at an ATM.

I love being a member of a credit union. They are very understanding, they're willing to work with me, and they're not punitive in the sense that transactions in either direction are totally impersonal. They depend upon their members, and go to great lengths to show it.

[kirby]

2. What do you mean by at risk? n/t

[monmouth]

3. My debit/credit card is VISA, my bank is Wachovia. I used the

debit at the grocery store today with no problem.

[ThomWV]

4. Your debit card should remain OK simply because the deposits behind it are guaranteed

FDIC.

[Liberal In Texas]

6. We were using a debit card instead of credit for day to day purchases until

my wife started reading about account number theft on the net. With a credit card, you can call in a stolen number and get the charges taken off. With a debit card, they can wipe out your bank account and you'll play hell trying to get the money back.

[Phentex]

10. AND some insist you have only 48 hours to report

any funky transactions.

I keep one with just a small amount of cash in it at a time.

[lapfog_1]

12. My debit card sends me a text message to my cell phone

for every transaction. If I ever see one that isn't one I authorized, I have a speed dial number to halt my card pre-programmed into my cell phone. The text message shows up within a minute or two at most from the time of transaction.

I LOVE this feature.

[PA Democrat]

16. That is cool. I'm going to ask my bank about this.

[TreasonousBastard]

18. Now that's neat! What bank does that? n/t

[lapfog_1]

22. Online bank... netspend.

www.netspend.com

I keep $500 or so there for bill paying and buying online stuff. Very useful. But look carefully at the fees... I went with the annual fee option which, I think, is no longer offered.

The per transaction fee is very expensive if you plan to use it a lot.

The monthly fee is reasonable, but still expensive compared with your standard bank. I think it's like $11/month or so.

Edit: the real bank is named Metabank. I don't know how they are faring in the financial world at this point.

[TreasonousBastard]

25. Oh, it's a reloadable card, and with hefty fees...

so it's not that convenient for me.

I use my Visa check card a lot, and BoA (yeah, yeah-- here come the torches and pitchforks...) has a neat little thing where they round out the charge to the next dollar and put the change in a savings account.

I don't keep vast amounts in that account so it won't kill me if someone cleans it out. It'll piss me off mightily, alright, but there's not that much they can get.

[TBF]

24. Paypal does it too with their debit card.

Paypal has both debit and credit cards available. I have a small seller's account & re-sell my kid's clothes. Then I can take my VISA debit anywhere to buy things with my funds. Usually I just go to my favorite clothing stores and buy their new clothes for the season. I get an email at home confirming every purchase. Could most likely set it up to text just as easily...

Some people have had problems with Paypal, and they do have fees for certain transactions, but for my limited usage it has been great.

[TreasonousBastard]

26. Interesting... I had a Paypal account but let it go dormant...

This might be one reason to activate it again.

[JuniperLea]

7. Debit cards "debit" your checking or savings account...

Credit cards put your purchases on account and you pay them later.

There is a credit card company associated with debit cards so you can use the debit card wherever you can use a credit card. It's still a debit card, so even if the cashier asks you "debit or credit?" and you answer "credit" it will still debit your account. Replying "credit" only keeps you from having to enter your PIN..

[Vilis Veritas]

8. Salt, stock up... ;-)

[lapfog_1]

9. No, or at least, they shouldn't be.

your debit card accesses your bank account. Your bank account is FDIC insured to $100K.

The bank should have no problem with you using your funds on deposit (so long as it isn't getting into a credit / overdraft on your account).

Now, it turns out that a lot of ATMs at "convenience places" (like grocery stores or quick marts) are serviced by third parties, often even mom&pop folks that "buy" the location from a national reseller of ATM machines. They load the machines with cash. Cash that they borrow using short term (less than 7 day typically) revolving lines of credit. These lines of credit are becoming very difficult or very expensive to get. So, they either raise the fees on the use of these types of ATMs or get out of the business. So yeah, your debit card may not be quite a useful in the coming months as it once was... but your account should be sound.

Caveat - so long as FDIC stays in the business of making good on insured accounts.

[SoCalDem]

11. Debit card = electronic check

When you use it at most businesses, you have to use your pin number, and the money is instantly gone from your account.

Some merchants do not have the automatic link-up, and produce a paper "charge slip" that you must sign (hopefully they ask for ID)..Those slips are then TREATED like charges, and submitted with their deposit.. their bank then processes them as checks.

If a signed slip shows up at your bank and your account does not have the money, you just "bounced" a check, and your bank will charge you fees..

Debit cards with the Visa & MC logo "tell" the merchant that they WILL get their money, so they are eager to accept them...a plain old ATM card must always be used with a pin number, so no cash in the account or a forgotten pin number, and you're out of luck.

Some banks offer you a "float" amount above the amount in your account.. Ours has a $7500 amount, but if we tap into it, it's like using a credit card, with fees & interest..

[trof]

13. OK, here ya go. Now PAY ATTENTION!

Credit card gives you the float.
Debit card comes out of your checking account IMMEDIATELY.

My checking account (credit union) pays a little interest.
Not much, but a tiny bit.

If I use a credit card, NO MONEY COMES OUT OF MY CHECKING ACCOUNT until I pay the credit card bill.

If I used a debit card (don't own one, never will) the money comes out RIGHT NOW.

Even if your checking account doesn't pay interest, wouldn't you rather hang on to what's in there until the c/c bill comes due?
Rather than having the money disappear instantly?
There are other checks you could cover in the meantime.
Hold your charges until the bill comes due each month.

CAUTION: Pay the entire c/c bill EVERY MONTH.

[trof]

21. Ya didn't pay attention.

;-)

[tularetom]

15. As long as you pay the entire credit card balance every month

theres no reason not to have a credit card.

BTW, if you have a debit card do not use it to pay for meals in a restaurant where you have to give it to your waitperson. Some restaurant employees carry little magnetic card readers in their pockets and can instantly access your account info. This will not work with credit cards.

[proud2BlibKansan]

17. Of course not

Unless banks stop honoring each other's paper and you can't use your debit card in another bank's ATM, debit cards will work, even if credit cards are abolished (and I don't see that happening either).

[Warpy]

19. No, but if a significant number

of your dumber fellow citizens all panic on the same day, the ATM might run dry before you get there.

The drawback with the debit card is the same for writing checks: if you lose count, you could be socked with bounced check fees. They pay the biggest check/debit first in order to sock you with the most fees.

I limit my risk by keeping a separate account for the debit card so if it gets hacked, the loss is minimal.

[PufPuf23]

20. This was a rhetorical question for

my first OP at DU.

I have been a reader for years and a member for over a year but seldom a poster and this is unlikely to change.

Thank you for the answers. This discussion is a help to me and I hope others.

[soothsayer]

23. debit cards charge your bank money. credit cards cost the store money.

[TexasObserver]

27. Debit card - your money. Credit card - Their money.