Cash, Credit Cards, Debit Cards, & Other Financial Issues

[Amara]

The off-the-topic of credit and debit cards talk in the other thread seemed to me good enough to inspire its own thread. So here it is. Do you have advice, questions, ideas, thoughts, suggestions or other issues around any of these? Share them here. We can surely all benefit.

Advice: The manager of my credit union's office shared with me that the most dangerous place to use a debit or credit card is a gas station/attached store. You are more likely to get your number ripped off there than anywhere else. So for me it has always been cash. Not just with gas but in many places. I simply cannot understand the mindset of many people who say they won't use cash. For me, it's clean, quick, anonymous, you can never lose any more than you have on you, and you never have to deal with trying frantically to clean up and stop the resultant mess of lost or stolen credit or debit cards if you do lose it.

And as I mentioned in the other discussion, when I used eBay to buy my antique bookmarks and PayPal I refused to give PayPal my credit card number. Instead of using my accounts at the credit union, I simply opened up a basic free checking account at a bank and used that. When I wasn't buying something I kept only $6 in it; then when I did buy something I would transfer in the exact amount. Nothing ever happened, but if it had I wouldn't have lost more than $6.

I carry only one credit card from my credit union. I had some financial difficulties and ran a balance (and paid the interest) for a couple of years, but last year I was able to pay it off. It now stays at zero or no more than I can pay off at the end of the month.

So ... how about you?

[CakeBeret]

I don't like using cash. In the past 7 years, I've used debit/credit almost exclusively, and I've never had my card number stolen by a merchant. My DH's wallet was stolen a couple years ago and a few fraudulent charges occurred, but we had zero liability and zero losses--my CC company even covered the cost of a new wallet.

Currently DH and I are using a cash-only system to force us (him, mostly ) into staying within budget. It works, but using cash constantly irritates me. I have to go inside the gas station to pay instead of paying at the pump. I have to fumble with different bills, counting coins, and putting away change at the end of a transaction. I strongly prefer using my bank card--transactions are much quicker and smoother.

I am also terrified of losing my wallet and thus losing that week's cash. If I lose my bank card, my bank does not hold me responsible for *any* fraudulent charges. If I lose cash, I'm out anywhere from $20-$150.

[sparksals]

Is there a link to the other thread?  There is no info about title etc.

I use debit/credit cards exclusively.  Rarely have cash on me.  It is just more convenient.   My husband's and my debit cards have each been compromised once, but I caught mine after the charge was made somewhere in Austria and DH's was caught by the clearing house and our bank just issued us a new card.  There were no charges.  I don't know how they foresee that it may have been compromised in that area. 

For me, it is easier to keep track of our spending having an electronic record of it.  I keep very close eye on all our c/c's, bank accounts, etc., so it is rare if I don't notice any irregularities, if they occur.

[Amara]

Is there a link to the other thread?  There is no info about title etc.

Oh yes, sorry, it's in the "I'm never shopping THERE again!" thread.

[stargazer]

I'm not sure if this was a special promotion my bank was running or if they all do this, but I went in to close an account.  They suggested I actually keep it open and make it my debit card account.  They would give me a debit card that ONLY had access to that account.  So I could move money into it as I needed but not keep most of my money there.  That way if a thief ever got access to the card, he wouldn't get access to all my money.  Although I do like using my credit card simply for the cash back.  I'm saving up (slowly) for a vacation that way.

[jedikaiti]

I vastly prefer credit/debit cards - I have a record of exactly what was spent where & when. Cash just kinda tends to vanish into the ether without a trace. Not to mention, if I lose plastic, I'm not liable for fraudulent charges. If I lose cash, I am SOL.

Also, getting cash usually costs more - most of my banking is done with a credit union out of state. While there are some networked ATMs I can use without fees, there's not that many. So if I want to go plastic-free, it's going to cost me. And then we also go back to the possibility of stolen wallets and ether. I do have an account with a national bank, so plenty of ATMs there, but if I want to go shopping at Costco (where I can't use my debit card as a credit card), I get charged $0.25 for using my card as a debit card, so that's not exactly my primary account.

I use Paypal for lots of online transactions - and yes, I gave them my bank info. Never been a problem. Actually, it was really handy when my debit card vanished and I had to pay some bills while waiting for the new card - Netflix takes Paypal! Very handy.

And, if I'm doing a one-off purchase (i.e., not recurring, like Netflix), Discover (as someone in the other thread pointed out) has a deal where they can generate a one-time-use CC #. So even if someone steals that number, it won't do them any good. I know other banks have done that in the past, I don't know who all does now. Paypal used to, I don't know if they still do or not.

And stargazer pointed out about rewards - another reason I like plastic. My credit union even gives rewards when I use my debit card as a CC (so sign for it, not PIN). I like getting rewarded for buying stuff I was going to buy anyway.

[Outdoor Girl]

I use credit cards almost exclusively.  I collect different rewards on two different cards that I use for money off future purchases.  I pay them off every month.  I find it better for tracking what I spend because I always have a receipt.  When I pay cash, I don't always get a receipt so sometimes I forget to write it down.

I keep a little bit of cash on me for places that don't take cards.  Plus, I run the lottery pool at work so people give me cash for that.  I use cash to buy the tickets every week so I don't have too much cash in hand.  I will occasionally use my debit card when I don't have enough cash on hand.

As I said in the other thread, the best thing I did was get a card in my last year of university.  I only ever have two credit cards (different banks/companies) and I stay away from store credit cards.  They have even worse interest rates than regular cards!

[turtleIScream]

We deal almost exclusively in credit cards, which we always pay off each month. We have an Amazon VISA that earns us rewards, which we save up and use for Christmas presents. We also have a gas station card, that earns points we redeem for iTunes gift cards. I love the flexibility and freedom of using credit. I have virtually no discipline with regards to cash; it is too easy for me to spend just a couple of bucks here, or a dollar or two there. I hate charging small amounts, so it is much easier to resist just swinging through Steak and Shake for a 1/2 price Mint Cookies & Cream shake when I don't have cash.

My husband uses our card quite a bit for business expenses, which are then reimbursed. The company does not issue corporate cards, ever. One of his colleagues is a Dave Ramsey devotee, and will not use credit for anything (which is fine, if that fits the way you live.) I am not sure what this guy was thinking though, when he invited several clients to dinner at an out-of-town conference. He did not have cash for the $500 meal tab, and does not carry an emergency credit card. Fortunately, my husband's schedule unexpectedly opened up, and he was able to attend the dinner (and pay for it.)

I have never used a debit card. When they first became popular, there were a lot of fees/surcharges associated with using them. I understand that is no longer the case, but I still don't see them providing much, if any, benefit to me over cash or credit.

[Virg]

Amara wrote:

"Advice: The manager of my credit union's office shared with me that the most dangerous place to use a debit or credit card is a gas station/attached store. You are more likely to get your number ripped off there than anywhere else."

This falls victim to the concept of odds.  You're more likely to get your card compromised at a gas station than other location, but the odds are low that you'll get compromised at all, and those odds have to be compared to the odds that you'll lose cash or get it stolen and the issues inherent with not being able to pay at the pump in a number of locations, so in the "big picture" using a card may be overall safer.

"I simply cannot understand the mindset of many people who say they won't use cash. For me, it's clean, quick, anonymous, you can never lose any more than you have on you, and you never have to deal with trying frantically to clean up and stop the resultant mess of lost or stolen credit or debit cards if you do lose it."

Unless you keep your cash separately from your wallet or you don't carry any kind of card at all, losing your cash is very likely to involve losing your credit cards too, so using cash wouldn't necessarily eliminate this risk for most people.

Virg

[WillyNilly]

And as I mentioned in the other discussion, when I used eBay to buy my antique bookmarks and PayPal I refused to give PayPal my credit card number. Instead of using my accounts at the credit union, I simply opened up a basic free checking account at a bank and used that. When I wasn't buying something I kept only $6 in it; then when I did buy something I would transfer in the exact amount. Nothing ever happened, but if it had I wouldn't have lost more than $6.

For the 2 years or so every bank I know of requires either direct deposit or a minimum balance in the thousands to get a free checking account.  Using your plan would cost at minimum $20 a month.

[jedikaiti]

And as I mentioned in the other discussion, when I used eBay to buy my antique bookmarks and PayPal I refused to give PayPal my credit card number. Instead of using my accounts at the credit union, I simply opened up a basic free checking account at a bank and used that. When I wasn't buying something I kept only $6 in it; then when I did buy something I would transfer in the exact amount. Nothing ever happened, but if it had I wouldn't have lost more than $6.

For the 2 years or so every bank I know of requires either direct deposit or a minimum balance in the thousands to get a free checking account.  Using your plan would cost at minimum $20 a month.

Mine just requires $25 - that is, I have to transfer $25/month into the associated savings account. They don't specify where that money has to come from, so I have 2 automatic transfers set up - one to move $25 from savings to checking, and one to move $25 from checking to savings a couple days later. And now I have a free checking & savings account.

I've also seen another bank (don't recall which one) advertising "Do you miss free checking? Our customers don't."

[Dalek]

I usually don't carry any more than $5 or $10 in cash. That's mainly in case of an emergency. The rest of the time, I use my bank card.
My account has been compromised once before but it was less if a headache to fix than if I had dropped or lost a hundred dollars in cash. Clumsy me would probably lose cash.

[JenJay]

We've started buying everything with cash as a budgeting technique. I pay all the bills (rent, utilities, etc.) online straight from the checking account then figure out how much cash I'll need for groceries, medical/prescription co-pays, fun money, etc. I withdraw the cash I'll need, transfer any extra money to our savings account and/or visa (we're working on paying it off completely - almost there!) and only leave $20 in checking to ensure we don't accidentally overdraw it. The cash then gets divided into the various envelopes which are somewhere safe at home, I only leave the house with what I need. Whatever is left over at the end of a month gets tucked into the "Saved" envelope and we use it to splurge on something we hadn't budgeted for. That could be anything from a pizza to a trip to the beach depending on how well we've done and how long we've saved it up. DH and I are not natural savers so seeing the money (or lack thereof) is a good motivator for us. It's hard to justify running out for ice cream when you have to choose to take it out of the "we want to go to the beach next weekend" envelope. 

Speaking of buying everything with cash, we never spend anything smaller than a $5 bill. All the loose change and $1 bills go in a change jar. We've been doing this about 6 months and have over $75 in ones and I don't know how much in change! I think when it gets to be $100 I'll put it in savings, too.

I recently had a credit card number stolen online so I will never again store any info in an online account (it had to be either amazon, consumer reports or netflix, the only places DH's card was used) and I'll never, ever use a checking or savings debit card online. 

We get points for using our visa so when we're making a big purchase we'll use that and then make a transfer from either checking or savings to pay it off. The points can be redeemed for items or cash.

I'm envious of those of you who can use cards to earn all the rewards and pay them off monthly. I know DH and I would set out with the best of intentions and end up in severe CC debt if we tried that. We're "out of sight out of mind" people. We do stupid things like think "Hey, there's going to be an extra $200 on your paycheck three weeks from now, we should buy X.", which isn't so bad but we'll end up doing that 2 or 3 times until we've spent that $200 bonus into a $400 debt without even realizing we've done it. The visual aid of cash is definitely the way to go for us! 

[WillyNilly]

I use my debit card for most daily purchases and credit cards for major ones.  Debit because I get great rewards from my bank for using it, and because i never keep too much in checking at any time anyway.  And I'm not liable if my card is lost or stolen.  Credit for big purchases because my cards offer certain buyer protections.

Like others, I rarely use cash because it makes small impulse purchases too easy. Plus its disgustingly dirty.

My advice would be to speak to a qualified financial adviser at least once every few years.  Even if you end up not signing on a using them to manage your money, just having a professional look over everything, listen to you long term plans and give you some advice is good.  DH and I actually went today and some of the advice we got was obvious once our FA said it, but simply hadn't occurred to us.

My other advice is save and pay off debt.  First save a minimum 3 months living expenses, then pay off your debt, then save save save. Start your retirement savings in your early 20's - you never know what will happen down the line (have kids, loose your job, buy a house, etc) that will interfere with saving for retirement, but if you started early, compound interest will work in your favor.

[otterwoman]

I use either cash or my Amazon Visa Credit Card. I rarely ever use debit. If I have the cash in my wallet, I'll use that. I used to use credit cards more, but DH is a cash is king guy and I've picked up some of that habit. Besides, he gives me the grocery money in cash, so it's in my wallet. The Post Office employees love me, I always have lots of small bills just when they are out of everything smaller than a $20. Many times I have broken down $20s into small bills for them. I haven't lost a wallet in over 25 years, so I haven't lost cash. The credit card thefts were done without my actual cards and my CC company always handled it for me.

When I was working, I'd use my credit card for everything work related. My company would reimburse, and I'd get to keep the rewards points. I racked up a bunch when the company reimbursed me for my move. I always pay off my credit cards at the end of the month, so I don't pay interest.