Today reading Dave Ramsey’s article in our paper I noticed an article about debit cards vs. credit cards. It’s something my family has discussed a few times. In the article Ramsey was advising the person that had written in that debit cards should be chosen over credit cards and all about the dangers of credit cards. My issue came about from the lack of information on the danger of using debit cards.
We have had both credit cards and debit cards… we also have our credit cards paid off and don’t carry balances I’m super careful to not normally use debit cards. In my past I’ve had debit cards fraudulently used (and credit cards too). The debit card surprisingly had never left my possession… I had only ever used it at the bank teller – not even the ATM. The card in question was a business card and somehow had multiple charges appear on it despite never being used. We have also had the same type of experience with our credit card.
In both cases the card in question was immediately cancelled. In the event of the debit card the bank was great about letting me know that they should be able to reimburse the money within 10 days. As my credit card was on a charge, the company put a dispute in and the money never left my hand. After the amount of time, my debit card and my credit card were both ones luckily that don’t hold the victim liable. In some situations banks aren’t liable on the debit card for the first so many dollars. (Usually $50.)
We were very lucky that we weren’t dependent on the money in my business account to pay any of our bills. I hate to think if the debit card that was stolen had been our personal account and had drained our account near time to pay our mortgage. Our debit card normally comes out of our checking in that case and we do have savings, but I remember a friend having to borrow money to put gas in their truck until their account was reimbursed because of a debit card fiasco.
For people living pay check to pay check I can’t even imagine how devastating being without any money for 10 or more days could be. For me the logic of using my credit card to reduce risk makes total sense.
Reasons given to not use a credit card include:
- If you can not budget
- If you might spend more because you are using a credit card
- If you are already carrying a balance
Reasons to use a credit card:
- Can’t afford to be without money in the event of a stolen card
- Need a credit history (Cheaper interest rates on mortgages with a credit history, as well as on some other items)
- Don’t ever pay fees to have a credit card
- Don’t allow the limit to be set extremely higher than you need (Seriously I think we could buy a house on credit cards and have asked them numerous times to not raise our limits)
- Watch for charges that aren’t your own. (Generally scammers start with small purchases to see if you notice)