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Pay off your cards and cut them up. No financially responsible person needs a credit card--get a debit card. Every time you borrow you tie a big anchor to your future investment earnings potential. "Snowball" the debt away, then save like a Fool--or else drown in your own foolish debt.
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Hi, alancornell, and welcome to the boards! You do not say to whom your post is addressed. If it's to the Fool Community at large, I will disagree with you. Credit cards offer a lot of flexibility and convenience and can often get you discounts or rebates that might not be available if you pay cash. I have one card that gets me free LDW coverage when I rent a car, another that gives me 5% instant rebate on my gasoline purchases, and 2 store cards that give me access to sales before the general public. Also, with the credit cards I get the float. It's not much, but it allows me to regulate my payments.

Of course, it's sort of scary to be walking around with the equivalent of 3 month's salary in my pocket, but I like to think I have the discipline not to buy things I don't need.
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>> No financially responsible person needs a credit card--get a debit card. <<

We may not need them, it's true, but IF one can avoid abusing them there are uses for them.

I haven't carried a balance from month to month in three years, nor have I ever had a balance over about $500 in all that time. Yet I still wanted the Gold Visa card for the added benefits it provides.

(And 've already used it, too -- when we moved in the summer of '97, I had a small accident with the truck I rented -- and because I used the card, I could avoid-- not pay for -- the collision damage waiver and still be covered. These are fairly small benefits if one can't control their usage of the card, but if you can they are a useful financial tool. Big "if," though.)

Tim
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No financially responsible person needs a credit card--get a debit card.

Having a debit card instead of a credit card doesn't make you any more or less of a financially reponsible person. While you're right that no financially responsible person needs a credit card, neither do they need a debit card. However, financially responsible people have CCs to use for their convenience and profit by charging day to day expenses on them, earning cash back and other perks, and paying off the balance in full each and every month. I find debit cards less financially rewarding (for me, at least) and thus do not use them.

Irresponsibly yours,
Mike
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<<No financially responsible person needs a credit card--get a debit card. >>

Pretty judgemental, I think. I have had a credit card since 1977 and rarely to never paid interest. I have reaped many rewards(the discover check will come in a month). I also use a credit card as an easy way to track my expenses. I'm well on my way to being the MND so hard to believe I wouldn't be considered financially responsible ;) BTW, the debit card probably wouldn't have gotten me out of my jam in Bozeman in October when my airline went bust before I got home. To have a debit card be the equivalent of my credit card, I'd have to have way too much money sitting in the account it is tied to. That would be financially responsible ?

Jacki
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>> To have a debit card be the equivalent of my credit card, I'd have to have way too much money sitting in the account it is tied to. That would be financially responsible ? <<

That's a real good point. I have a Visa debit card and a Visa gold card, and the debit card is linked to my checking account.

What if I had an emergency that sets us back several thousand dollars? With a debit card, that could only work if I kept several thousand dollars in my checking account at all times (earning 2% interest). With the credit card, I can charge an emergency, get free float on the balance for a month (continuing to earn interest on the charged balance) and then pay it off with my savings account (earning 5.25%) just before I'd have to pay interest.

A debit card doesn't provide some of the perks (travel insurance, collision damage coverage) that my credit card provides.

I think "avoid credit cards like the plague" is a good idea for people who can't use them wisely and pay them off every month, but as a general statement they can be a valuable part of a sound financial plan if used responsibly.

Tim
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<<No financially responsible person needs a credit card--get a debit card. >>

I have to agree with Jacki that this is a little extreme. I use a credit card for my business travel expenses, rather than float my own money for this. Also, a credit card can be used for big purchases that have to be done prior to a payday. They have the advantage of helping even out cash flows.

I gave up personal use of my credit card last year, but I found when a big expense comes up, it is very handy to use. To give an example - I had a flat tire this past week. It's towards the end of the pay period, I could have taken the money out of savings. However, next payday I have enough to pay for it. So, I charged it, and will pay the bill this weekend after I get paid. Very convenient.

George
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alancornett wrote:

Pay off your cards and cut them up. No financially responsible person needs a credit card--get a debit card. Every time you borrow you tie a big anchor to your future investment earnings potential. "Snowball" the debt away, then save like a Fool--or else drown in your own foolish debt.


I think every statement must be taken with caution. Using a credit card I ended up with almost $150 more than if I had used a debit card.

I use the Discover card with no annual fee. Between the cash back bonus and the interest that I received on the money that I kept for 30 days I earned almost $150.

If I had used a debit card that money would have been removed from my account immediately and I would not have received any interest. I also would not have received the cash back bonus.

I think it is important, no even critical, to pay off the balance in full each month. Then you incur no interest expenses.

If you can show me how you can make $150 a year using a debit card let me know.

Also, if I use a credit card and it is stolen, I can close the account, get a new card and continue on my way. If a debit card is stolen, I have to close my account out and open a new one. But I can not close it out until all of my checks have cleared, so I can lots more hassles. I will agree that I am limited in both cases to a loss of $50 if I report it timely, just the effort and inconveniece is not worth it.

If you think I am incorrect on any of this let me know.

Zeb and Hildegarde
(in the country right next door to the Ziffles)
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I reiterate the problem I have with debit cards.

Someone stole my Discover card number in December and charged $500 worth of clothes from a catalog.

Since it was a credit card, Discover removed the charge while they investigated the fraud.

If that had been a debit card, I would have been out the $500 from my checking account while the fraud was investigated. Plus all of the hassle of cancelling a checking account.

If you need to have plastic, please remember the problems with Debit Cards. Definitely do not have a debit card from an account that has overdraft protection to your savings account. Ow.

-Megan
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"Pay off your cards and cut them up. No financially responsible person needs a credit card--get a
debit card. Every time you borrow you tie a big anchor to your future investment earnings potential.
"Snowball" the debt away, then save like a Fool--or else drown in your own foolish debt. "

I disagree. There are some situations in which a debit card simply will not work. A while back, I was travelling and needed to rent a car for several days. The car rental company would not accept a Visa branded debit card (or any debit card for that matter) when paying for the rental car. Also, if you travel for business and get reimbursed for travel expenses, a credit card is invaluable. There is no reason to tie your money up waiting for your expense reimbursement that's coming in 2 weeks when you can tie up the banks money instead.
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I totally agree, tsmiller. Credit cards are an evil necessity in this world today. Used prudently, and paid off each month, they can actually be a beneficial thing.

I don't even have a debit card. Who needs to forget putting in a charge on your checkbook ledger then wondering why you bounced a check?

Also, credit cards are a good thing to have in an emergency. I mean to have a zero balance but I'll always keep a card. It might keep me alive one night (and I'm not kidding or saying that lightly).
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I don't even have a debit card. Who needs to forget putting in a charge on your checkbook ledger
then wondering why you bounced a check?


I've used mine once. Accidently. Pulled it out of the wallet thinking it was my VISA. Had a hard time figuring out why I couldn't reconcile my checking account that month.

Mine is also my ATM card. I would just exchange it for a regular ATM card except for the hassle.
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I don't even have a debit card. Who needs to forget putting in a charge on your checkbook ledger then wondering why you bounced a check?

Here's another perspective: I love my debit card--whenever I have a choice of writing a check or using the debit card, I'll use the debit card every time.

Why? Because my CU is much better at keeping records than I am. I have enough "slush" in my checking account (and overdraft protection for when something unexpected comes up) so I don't worry about bouncing checks. At the end of the month, I connect to my CU's web site, download my transactions into Quicken, and it's very easy to categorize them because all the information is right there. Makes things much easier and quicker.
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Here's another perspective: I love my debit card--whenever I have a choice of writing a
check or using the debit card, I'll use the debit card every time.

Why? Because my CU is much better at keeping records than I am.


I think it's a dangerous habit letting your financial institution perform your "book balancing" for you.

Paranoid John
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**** Here's another perspective: I love my debit card--whenever I have a choice of writing a check or
using the debit card, I'll use the debit card every time.

Why? Because my CU is much better at keeping records than I am. I have enough "slush" in my
checking account (and overdraft protection for when something unexpected comes up) so I don't
worry about bouncing checks. At the end of the month, I connect to my CU's web site, download
my transactions into Quicken, and it's very easy to categorize them because all the information is
right there. Makes things much easier and quicker.****

I agree with you, for the most part. You are correct when the choice is between a check and a debit card. I also have overdraft protection and some "slush". My comment was in consideration of debit vs. credit card, however. I've personally (just me) haven't seen the need for a debit card. I do keep an ATM card for cash emergencies, but that's it.
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Here's another perspective: I love my debit card--whenever I have a choice of writing a check or using the debit card, I'll use the debit card every time.

I love that debit visa card!! It has taken me over a year to go through a single box of 250 checks. Perfect timing I might add since I'll be moving next week. Anyway, there's a somewhat sizable savings when it comes to writing less checks. The card only costs me $1.25/month which is all I pay for my account since I have a direct deposit account.

I might suggest that if you use a debit card, always but always put your receipts into the same place in your wallet so that when it comes to updating your accounting software you can just pull out all the receipts and record everything.

If you don't have accounting software, you should seriously consider getting some!! In the six or so years it took me to become debt free, both Quicken and Excel were invaluable tools. I use Quicken to keep track of my past spending and an Excel spreadsheet I developed to help forcast future spending for the next year broken down by paydays.

Alas, I rattle on...next...

Thanks for reading this far,
DisIzMe
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Why? Because my CU is much better at keeping records than I am. I have enough "slush" in my checking account (and overdraft protection for when something unexpected comes up) so I don't worry about bouncing checks.

Warning. Debit cards are not given the same fraud protections that credit cards are given. With a debit card, you have lost the money until the dispute is settled. With a credit card, you pay nothing until the dispute is settled. With overdraft protection, you not only lost your money in your checking account, you also lost your money in your saving's account.

For a horror story, go to this link in Aruba's Isle of Revenge

http://boards.fool.com/registered/Message.asp?id=1350016000195000&sort=postdate

I had a link at one time to (I think) banking laws that showed the difference between debit and credit cards. The problem is that the link was under a former life (PSUEngineerFool) and can't be searched for by TMF's search engine.

..IF
who keeps thinking about being reincarnated to PSUEngineerFool
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Warning. Debit cards are not given the same fraud protections that credit cards are given. With a debit card, you have lost the money until the dispute is settled. With a credit card, you pay nothing until the dispute is settled. With overdraft protection, you not only lost your money in your checking account, you also lost your money in your saving's account.

This is a good point. I definitely do keep this in mind--when I buy big-ticket items or anything online or via mail order, I still use a genuine credit card for the transaction. But for groceries, gasoline, and other mundane charges like that, it's great.
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