topic Re: Debit or Credit? in Credit Cards

Debit or Credit?

CreditDrama85 — Tue, 26 Feb 2008 06:53:55 GMT

althought some say it is easier to overspend when paying by credit, it seems to be a wiser way to go. when using debit--i have encountered the scenario of my account becoming negative by $-30 and i might have 5 pending charges initiated before a check cleared that caused my account to be $-30. WELL, since those debit transactions are only pending and dont post until AFTER the check--the bank gets to charge me $160 (32per debit trans X 5 transactions).........at least when using credit, worse case scenario...you incurr 1 over limit fee.

Re: Debit or Credit?

Anonymous — Tue, 26 Feb 2008 09:18:54 GMT

Hi CreditDrama85,

Are you talking about debit card with Visa or Master logo on it?

You know what, It does not matter which transaction you choose to make your payment.

It is nothing but how you track and manage your money.
You are not tracking your money well, that's why you are having the problems on your account.

I suggest you to use note book to keep tracking your money in the account, and how much you spend.

Example;

Date Items Merchant Amount New Balance

2/17/08 500.00

2/21/08 Gas Chevron - 25.50 474.50

2/24/08 Grocery Vons - 42.50 432.00

2/24/08 Refund Target + 18.00 450.00

You really need to know about your account balance when you swipe your card. And that balance should be the newest balance even it does not show on your account yet. Once you get used to this, you will never have problem like this. No more extra charges. Be smart CreditDrama85!

Message Edited by bunnyrabbit on 02-26-2008 01:18 AM

Re: Debit or Credit?

Anonymous — Tue, 26 Feb 2008 11:54:51 GMT

This is so true! I once incurred fees because instead of writing down what I charged to my debit card, I "kept it in my head" and went by the amount shown on my online account. The problem with that was that if the charge came through from my purchase more than 3 days after I made it, the bank would put the money back into my account. As you can guess, I would go by THAT amount, and include money in my balance that would later disappear (after I spent it again).

So keeping track of debit card purchases is a MUST.

Re: Debit or Credit?

Anonymous — Tue, 26 Feb 2008 12:07:06 GMT

bunnyrabbit, I must disagree with you. It can matter either debit or cc. Gas stations, hotels and restaurants all pre-auth for not necessarily the same amount as the actual bill. And some will hold a pre-auth and run a separate charge, so it can be difficult to track the exact balance.

Although it doesn't sound like this was CD's case, I just wanted to bring up it's hard to be exact with debit cards. Which is however, along the lines of CD's point for another argument on behalf of using a CC over debit.

Re: Debit or Credit?

CreditDrama85 — Tue, 26 Feb 2008 14:01:51 GMT

i do need to manage my money better definately because i always check online and go by the available balance BUT that doesnt always work.......penguingeek understands my point though i think

Re: Debit or Credit?

llecs — Tue, 26 Feb 2008 15:02:02 GMT

I'm no debit card fan by any means. Last month, I loaned my debit card to DW so she could withdraw cash (cash is king) to pay for whatever she needed. She went to the gym with the kids and after her workout she went to their eatery to buy something to eat. She made 5 separate purchases (forgot this or that) with my debit card versus cash for a total of around $30.

Fast forward to last week (4 weeks later) and those charges finally hit the account. Mind you I keep a close to $0 balance whenever possible as my checking doesn't pay me to keep money there. So I first found out about those charges when I notice we were negative $180!!! Thankfully I gave her a card to a back-up account and no checks bounced or anything like that and was able to transfer money in once I found out that these were legit.

So, $180 bought the family 2 PB&Js, one chicken basil sandwich, one protein shake, some chips and 2 waters!

We solved this problem

Anonymous — Tue, 26 Feb 2008 15:21:48 GMT

We solved this problem by opening 2 checking accounts, our main checking which all of our money is deposited into with no debit card This account all of our monthly bills come out of and our checks are written from as well. And then a second checking that we transfer alotted amount of spending money in for the week with a debit card. We each have a weekly budget we are allowed to spend w/o tapping into our main checking account. This money takes in account, gas, food, and other small purchases (ie my husbands ciggarettes and his tea). We really strive to keep all of our receipts so at the end of the month we can see what we purchased and if we need to increase this budget if need be.

We then have a savings account with our savings and overdraft protection allocated 2 the 2 checking accounts. We keep overdraft protection funds of 300.00 in there at all times.

We did this because 4 yrs ago we had someone steal our debit card number and spend 3000 dollars causing our account to overdraft and rack up 360.00 in fees. Thank goodness Wachovia covered everything and we lost. etc..

This was alot of years of practice, and messing up with paying the thousands of dollars. And got sick of paying those fees. We also stopped using mac machines that charge you take out money. My husband was notorious for this and would spend each month almost 80.00 dollars in mac fees. 80*12= 960.00 dollars gone to take out 20.00 each time.

I then came up with this and each month we redo our finances to make sure we are spending savvy.

I have a spreadsheet I keep everything on, and I show this to my husband and he can see as well. Since he doesnt do the bills and has no idea where the money goes.

The key goal is pay your self before paying the bank or anyone else.

In 2005 we spent in overdraft fees apx 1500.00 and 1100.00 in bank atm fees. This was 2700.00 dollars paid to the bank we didnt need to pay.

In 2007 we paid to the bank apx 300.00 to the bank.

Even though it may not seem like it is that much at the time. It all adds up and it is money out of YOUR pocket.

You take that 160.00 x12 and that is 1900.00 out of your pocket. that could haev went into a savings account.

It took me a long time to see what i was doing and why I was doing it and once I started spreading it I saw this and went to my husband and we slowly but surely we turned things around.

Re: Debit or Credit?

Anonymous — Tue, 26 Feb 2008 15:25:58 GMT

For the exact reasons llecs stated, I don't have a debit card, or ATM card for that matter too. In fact both scare me.

I've heard it's easier for someone to steal your identity when you use a debit card. And that scares me.

But that's just me. I'm just super cautious....maybe when it's not even justified.

Just my thoughts.

Re: Debit or Credit?

Anonymous — Tue, 26 Feb 2008 15:33:21 GMT

my bank charges $2 for debit transactions while using the credit is free and get reward points. If i need cash i buy something at store and get cash back--all free!!

They do have some checking accounts now that pay interest.

Re: Debit or Credit?

Anonymous — Tue, 26 Feb 2008 15:53:44 GMT

I prefer Credit versus my debit card any day however I do use my dbit card minimally though (small purchases) credit card charges are covered via fraud or anything of that nature and debit cards are not --not to mention its directly linked to your checking account---I say use credit cards and take money and paychecks to pay the balances down monthly --works for me especially if you know the date prior to the statement dropping the balance on your credit report

Re: We solved this problem

Anonymous — Tue, 26 Feb 2008 22:58:26 GMT

clearingcredit wrote:
We solved this problem by opening 2 checking accounts, our main checking which all of our money is deposited into with no debit card This account all of our monthly bills come out of and our checks are written from as well. And then a second checking that we transfer alotted amount of spending money in for the week with a debit card. We each have a weekly budget we are allowed to spend w/o tapping into our main checking account. This money takes in account, gas, food, and other small purchases (ie my husbands ciggarettes and his tea). We really strive to keep all of our receipts so at the end of the month we can see what we purchased and if we need to increase this budget if need be.
We then have a savings account with our savings and overdraft protection allocated 2 the 2 checking accounts. We keep overdraft protection funds of 300.00 in there at all times.

I recently did the same thing! Except I went three steps further. First, No Overdraft Protection! Someone starts taking money out of your account without your knowledge or approval and the overdraft protection keeps feeding them your money. Although it sounds like the way you have it worked out you are limiting the ODP to $300.

Second, I ditched the debit cards for ATM cards only, linked to the second checking account, which is used only for cash withdrawals.

Lastly, all of our previous monthly debit card transactions are now done with CC's (with cash back rewards and better liability protection). To keep track of our spending, all receipts are entered into Quicken each night. We also have a white board in the kitchen with two numbers on it XXX/YYY where XXX = the amount we spent so far this month, and YYY = the amount we have left to spend.

And yes, I am **bleep**. A N A L (how about upgrading the filters to account for context?)

Message Edited by krystofur on 02-26-2008 02:58 PM

Re: We solved this problem

Anonymous — Wed, 27 Feb 2008 00:01:52 GMT

krystofur wrote:

And yes, I am **bleep**. A N A L (how about upgrading the filters to account for context?)

Reminds me of the thread where someone had to refer to a famous Melville novel as "Moby Richard" in order to get around the filters.

Classic.

Re: We solved this problem

Anonymous — Wed, 27 Feb 2008 00:49:20 GMT

The BEST reason for using a CC over a debit card - you do not get the same 'protections' from a bank debit card as you do a true MC/V.

Re: We solved this problem

Dawn — Wed, 27 Feb 2008 00:58:25 GMT

Lady_Scarlet wrote:
The BEST reason for using a CC over a debit card - you do not get the same 'protections' from a bank debit card as you do a true MC/V.

I don't think my son has to worry about this wonderful protection for those Big Macs, tacos and sodas that cost him $34 in overdraft fees each time he loses track of his spending.

I, too, am an advocate of using a CC for daily/monthly purchases and PIF monthly. Those debit cards, especially in the hands of those who don't understand the concept of the old fashioned "check book register" become extremely dangerous to their financial health. I much prefer the ATM only card approach and a weekly trip to the ATM for any needed cash.

Re: We solved this problem

Dawn — Wed, 27 Feb 2008 01:08:41 GMT

krystofur wrote:
I recently did the same thing! Except I went three steps further. First, No Overdraft Protection! Someone starts taking money out of your account without your knowledge or approval and the overdraft protection keeps feeding them your money. Although it sounds like the way you have it worked out you are limiting the ODP to $300.

I think one of the things that consumers need to be aware of is that even without intentionally arranged overdraft protection, some banks (maybe most?) provide courtesy overdraft protection that the customer is not aware of.

The amount of the courtesy protection will vary by customer and account history. Some banks will allow you to decline this feature and others won't (I think they would much rather preserve their abillity to improve profits by charging overdraft fees.)

So ... even when we don't set up ODP ourselves ... we may still have a certain amount of it whether we want it or not.

Re: We solved this problem

Anonymous — Wed, 27 Feb 2008 01:21:58 GMT

Dawn wrote:

krystofur wrote:
I recently did the same thing! Except I went three steps further. First, No Overdraft Protection! Someone starts taking money out of your account without your knowledge or approval and the overdraft protection keeps feeding them your money. Although it sounds like the way you have it worked out you are limiting the ODP to $300.
I think one of the things that consumers need to be aware of is that even without intentionally arranged overdraft protection, some banks (maybe most?) provide courtesy overdraft protection that the customer is not aware of.

The amount of the courtesy protection will vary by customer and account history. Some banks will allow you to decline this feature and others won't (I think they would much rather preserve their abillity to improve profits by charging overdraft fees.)

So ... even when we don't set up ODP ourselves ... we may still have a certain amount of it whether we want it or not.

Great point. We had to go to the bank and ask repeatedly for them to cancle the overdraft protection. They just didn't understand what we wanted. They kept asking us, "but, it doesn't cost you anything, why wouldn't you want it?"

We just opened up some new accounts at a CU and they also seemed surprised. Two days later in the mail we got a form they wanted us to sign saying we understood what they were offering and that we really didn't want it. Seemed to me like they were just trying to cover themselves. I didn't have a problem with it, just thought it was interesting.

Re: Debit or Credit?

haulingthescoreup — Wed, 27 Feb 2008 04:16:40 GMT

@CreditDrama85 wrote:

i do need to manage my money better definately because i always check online and go by the available balance BUT that doesnt always work.......penguingeek understands my point though i think

What we all tend to forget is that we are talking about a plain old checking account. We're just accessing it in a more exotic manner (debit card) than back in the day, when I used to go to Kroger on Friday nights and buy a half gallon of milk, and write a check for $20 over.

My kids spent YEARS being bewildered because when they called up and checked their balance, it seemed OK, but then whammo, the charges hit.

You have to manage these things just like an old-fashioned checking account. Get one of those tired old check registers, and write everything down, especially every ATM and debit draw, the moment you do it. Keep the running balance going (subtract, subtract, subtract, every now and again add), and reconcile it with your online account. I do this every morning!

This right here is the best argument for using credit cards, as long as you are self-disciplined enough AND have enough disposable income to pay them off every paycheck.

Re: Debit or Credit?

Anonymous — Wed, 27 Feb 2008 06:35:47 GMT

Thanks everyone to pitch your opinion. When I saw the original post, the other members are reading the thread but not responding. I was wondering why? Is it because of the time of post? ??? I am so glad that you guys responded ... Sylvia, krystofur, cheddar, and hauling, who always respond to my posts and helps me.

Nowadays we have new high-tech everywhere, but the old fashion ways are always coming handy and useful. This is true like a proverb/common saying. I used to had and used Sharecheck Visa but not anymore, I uses CCs instead to reward myself with CC's reward points. Therefore, I have one master note book for daily spending, and one each note book for each CCs to keep track their balances. I always keep the receipts with any amount even less than $1. And if there is no receipt, I always write down the amount I spend to the memo pad. Then I transfer those information to the notebooks, and do the math. Moreover, I do check the new balances and charges posted at online, and put the check marks next to the amount in the notebook with Red Pen. This check mark indicates me that these charges has been posted/added/subtracted to my account. Also, easy to see/track the new statement balance by CC account closing date even before statement comes out. All I do is, confirm the balance between the notebooks and online statements. Then, make the payments about a week before those due date. It's easy!

I am not rich, I am living like paycheck to paycheck. And all those money from paychecks are deposit to my bank account. Those money in my bank account is to pay to CCCs and bank. This way, less headache and trouble to keep trucking the money in the account. I really love the way I keep tracking my money! I know everyone's situation is different, but I wish everyone can do like me. Then everyone will be happy!! This would be n~ice. Isn't it?

Message Edited by bunnyrabbit on 02-26-2008 10:35 PM

Re: Debit or Credit?

Anonymous — Wed, 27 Feb 2008 15:36:00 GMT

@haulingthescoreup wrote:
@CreditDrama85 wrote:
i do need to manage my money better definately because i always check online and go by the available balance BUT that doesnt always work.......penguingeek understands my point though i think

What we all tend to forget is that we are talking about a plain old checking account. We're just accessing it in a more exotic manner (debit card) than back in the day, when I used to go to Kroger on Friday nights and buy a half gallon of milk, and write a check for $20 over.

My kids spent YEARS being bewildered because when they called up and checked their balance, it seemed OK, but then whammo, the charges hit.

You have to manage these things just like an old-fashioned checking account. Get one of those tired old check registers, and write everything down, especially every ATM and debit draw, the moment you do it. Keep the running balance going (subtract, subtract, subtract, every now and again add), and reconcile it with your online account. I do this every morning!

This right here is the best argument for using credit cards, as long as you are self-disciplined enough AND have enough disposable income to pay them off every paycheck.

I totally agree Hauling. IMO the Debit Card IS a check....of sorts. It has to be treated as such. It just LOOKS like a cc. Every thing else is different. If you don't keep track of EVERY transaction in in your check register, you are lost. Checking the balance online doesn't alwasys give you the CORRECT balance of your checking acct.(because of items not cleared). I use the check register, even though I do 99% of my bill paying with my bank's online bill paying system. I write down EVERY transaction in the check register, whether it's an electronic payment or a manual check. And I reconcile my account just like the olden days, when you got your statement in the mail. I really don't know any other way to go about it.

Re: Debit or Credit?

Anonymous — Wed, 27 Feb 2008 15:45:00 GMT

bunnyrabbit, you wrote: "Thanks everyone to pitch your opinion. When I saw the original post, the other members are reading the thread but not responding. I was wondering why? Is it because of the time of post? ??? I am so glad that you guys responded ... Sylvia, krystofur, cheddar, and hauling, who always respond to my posts and helps me."

I try to read all of the posts on all of the major threads. It's extremely time consuming. And even though I read thousands of posts every month, I only respond to those that I feel I can make a contribution. Quite often a thread will be started and I do not have the slightest idea on how to respond, as I have no experience in what is being discussed. I think many people share my feelings.

We try to contribute when and where we can. But quite often we cannot for lack of experience. Also(and I'm sure many of us do) I will read a thread, and WANT to respond, but at that moment, I just do not know how, or what to say, or say it correctly. So I'll continue on and come back later to respond. Of course the time of the post always comes into play too.

Sorry to hijack the thread every body.