Credit Cards are an American way of life. I don't know anyone without one.
But according to Adam Levin, the Mastercard and Visa analyst I interviewed today, there's a growing movement away from credit cards to debit cards. For some shoppers, it's not a matter of choice. Credit card companies are aggressively reducing credit limits -- even for people with good payment histories. But some former credit card users are switching to debit cards out of frustration -- or as protest against higher rates.
Personally, I don't own a debit card, because they are directly linked to your bank account and deplete the funds immediately. Most importantly, I would miss the credit card rewards that finance our family vacation every year.
I'm interested in hearing your experiences. Have you bit hit unfairly by rising credit card rates? How are you handling it? Are you one of those people moving to debit cards? Maybe even cash?
Comments
I use a mastercard stored-value card issued through my credit union. It's got everything other plastic has except: the ability to bury me debt, and any fees or cost to me. Credit card users...wake up, You're enslaving yourself to pay interest. It's stupid.
I prefer using a debit card cause it prevents impulse purchase.
Paul read the article, not everybody has that option.
To All,
Tips to using your debit card. I have learned this from reading news articles and my experience.
Lower your daily authorization limit on debit cards to $1,000 (Some banks have it lower, some have it higher)
Keep an eye on your checking account everyday, to catch suspicious transaction.
Find the right bank. Get one that does not charge for the debit card use (Either by using it as a signature or a pin transaction). Make sure there is no annual fee for the debit card.
Dont use it at pay at the pump or at dvd rental box. Use it online only at merchants you trust. You can store it Google, Paypal and Amazon.
If you want to use it at other places. I would recommend a separate checking account with a debit card at another bank and no overdraft protection.
Yes, I have been hit with lower credit limits and higher interest rates. I think it is outrageous to do this to those who are paying their credit cards on time and the monthly amount that is given. To penalize those who are living up to the agreement made with these companies is simply highway robbery!!! You are being penalized for others defaults...not fair, not fair at all. Then on top of this unfairness, this effects your credit score...which I have taken great pains to establish and keep excellent. Now I am being punished for something that I did not cause. So far, I am able to manage this blatant abuse of greed but it will put a damper on those who are responsible for the debt they made, or hamper those who may not be able to keep up with these higher payments.
If you have the money in the bank than you can pay the credit card bill when you get it in the mail (one bill, itemized for you). This way you do not pay any interest charges.
The debit card would take the money out of your account for you -- but I would be more afraid of having a debit card lost or stolen.
Credit card is a great help most specially when you don't want to bring cash. It depends on how you will control the limit.
training my dog
All bank fees should be closely examined. For instance, one bank that I know charges a 1% fee for cashing checks drawn on funds on deposit in their bank written on that account and cashed at the teller window if you do not have an account with them. Most including B of A charge a flat fee of $5. That to me is an outrageous practice and preys directly on less well off individuals who don't have a bank account or the ability to wait 3 to 7 days while a check they deposit clears their account. Those same banks then charge an even larger fee if you deposit the check and it comes back for insufficient funds. Balderdash !! In this modern age it doesn't take 3 to 7 days to clear a check electronically nor does it cost a dam thing if they didnt give you credit on the check in the first place.
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All retail banking practices need to be investigated and if regulations must be levied to stop their predatory actions...so be it.
One important point on many consumers's mind is "usury rates". It used to be illegal to charge more than 9% or 10%. It should not be acceptable that credit card companies can charge as much as loan sharks, it's clearly predatory.