Your Credit Questions and Answers

I avoid using my debit card because I'm frugal. Instead, I rely on multiple credit cards that offer a 1% to 5% rebate on purchases. In contrast, using a debit card doesn't provide any rebate or financial benefit. Free Float Another reason I prefer credit cards is the free float they offer. When I use a credit card, the money for my purchase doesn't leave my checking account until 10 to 40 days later. With a debit card, the cash is deducted from my checking account within a day or two. Merchants typically pay a fee of 1% to 4% for credit card transactions, and most have already factored this cost into their prices. Some merchants, however, offer different pricing for cash versus credit card payments. Gas stations are a common example of this practice. Being frugal, I always opt to pay with cash if it saves me money compared to using a card. Cash Back (Credit Card Points) During a recent road trip through the western United States, I encountered several gas stations offering ...

  Debit Card Horror Story A friend was at a local pub.  She purchased a drink and the bar kept her debit card “Open” and also kept the card at the bar.  She hung out with a group of us around the pool table.  She had a couple of drinks and about four hours later she went to pay her tab and leave.  They could not find her card.  The bartender  looked all over and it was not where they keep the customer’s cards.    The Bar gave her Debit Card to Someone Else My friend then went into her checking account that the debit card was linked to and found that in the past four hours she had bought burgers at Five Guys, stuff at Target, and drinks at another bar.  All the while she was sitting with us. She called her bank but the bank is not open except business hours and she could not shut off her debit card without talking to a customer service agent.  She did not have the emergency number of the bank because it was on her card. Her bank hol...

  A friend of mine used his debit card for everything.  He normally didn’t have any issues.  One day he forgot about a major bill that went through on his Debit Card.  It went through on a Friday and emptied his account.   He made seven or eight little purchases over the weekend.  Each purchase went through however the bank nailed him for $20 on each of the purchases.  The bank would not delete all of their charges.  He ended up with $100 in extra bank fees.   If the bank had just refused payment he would have checked and discovered his account was empty. Fees like this waste a lot of money.  If he used a credit card and paid it off every month he would not have had the overdraft debit card fees. Debit Card Fees I stop by a local pub regularly.  Several people the first thing they do after they walk in the door is go over to the ATM and get cash.  The ATM charges $4 for cash.  Many people will get $20 or $40 from the ...

Debit Card Advantages The main advantage to Debit Cards is they do not affect your credit and you do not need good credit to get one. Basically they have replaced checks as a way to get money out of your bank account. Normally debit cards do not help your credit. They do not affect your credit history. Debit Card Fees It amazes me when average income people use a Debit card pay $2 to $5 to get money from their ATM.  Broke by a thousand little cuts.  In my opinion it is crazy to pay $2 to $5 for a $20 or $50 withdrawal, actually any withdrawl.  We get upset about interest rates of 18%.  A four dollar fee to get $20 from your bank account is 20% charge just to access your money.  Be very careful of Debit Card Overdraft fees! Nearly anywhere you can get a Debit Card cash advance you could just pay for your purchase with a debit or credit card. Debit Card Horror Story A friend of mine used his debit card for everything.  He normally didn’t have any issues....