Why do people say charge cards are bad? (prices, price, best)

[Pitt Chick]

NOT for free... and only fools pay interest.

[celcius]

Hold on, there is a difference between charge and credit cards.

Charge cards, such as an American Express card, demand the balance be paid in full every month. Typically there is no official spending limit and the cardholder does not ever pay interest.

Credit cards almost always have a limit and allow a rolling balance. There is usually a minimum monthly payment in the $15-$100 range and you pay interest on the unpaid balance if any.

Personally I recommend always using a charge card in place of a debit card, and a credit card for whatever else. Charge cards offer far greater security and tracking, and the potential for rewards points, over debit cards. A fraudulent charge can be detected much easier/faster, disputed and resolved before the bill is due. With a debit card, the money has already left your bank account. Good luck with that. They are a security nightmare and only good for ATM use.

Everyone should have at least one or two credit cards even if they never use them. Like it or not, the world works on credit. Cut them up if you want, but at least have them and every few years request an increase on your limit. Not having any credit cards or history presents you as a serious credit risk, and Experian/Equifax/Fair Isaac don't care if you think credit cards are evil.

[jerseygal4u]

I really don't understand when folks have something against debit cards.
All it is simply a bank card(atm card) with a visa or mastercard logo. That's it..geez.
Its like using cash,and it doesn't even affect your credit,unless you spend money you don't have in your checking account repeatly. Bank of America let's you know when you balance is low,and as of last year,if you don't have the money in your checking account,it takes from your savings account. If you don't have the money in your account,you get denied. Transaction won't go through.
It can be used as debit or credit.
Its a simple concept. I don't know why others make it so hard.

As for a charge card,someone hit the nail on the head above.
A charge card has to be paid off every month if full. I never had one.
Doesn't make sense to me. I just used the debit card.
If I don't have money for a purchase,I just borrow from myself(the savings account)

[NJBest]

With charge cards you have to opt in to pay interest (IF they even offer it as an option). I've never seen anyone actually pay interest on a charge card. It's a convenience thing. I prefer AMEX.

[celcius]

You read my post - did you not flinch at the security defects?

Debit cards are linked directly to your bank account, making them highly vulnerable. If that information is compromised your account can be cleaned out easily, instantly. By the time the bank or you finds out, your money is long gone. You can investigate but that could take months, and the bank is not going to give you pity money to hold you over.

Here's how that same situation plays out on a charge or credit card. Your bank or Amex will contact you immediately - sometimes as fast as 5 minutes after the fraudulent transaction - and offer to cancel and send (or even overnight) you a new card. The charge is disputed, and resolved in 24 hours or less. You smile and go on with your day.

Make sense now? Get a charge card.

[ragnarkar]

Originally Posted by ukrkoz

Debit card gives you same tracking online, times plenty of available free financial software. Microsoft Money or such.

There's no way I'll keep multiple debit cards around and have the patience to track them all for unauthorized activity. Much less headache with the security from multiple credit cards.

[cokeman]

I can get all designer clothes and pay $10 for 30 years damn im rich haha.

[ChiGuy2.5]

Originally Posted by celcius

You read my post - did you not flinch at the security defects?

Debit cards are linked directly to your bank account, making them highly vulnerable. If that information is compromised your account can be cleaned out easily, instantly. By the time the bank or you finds out, your money is long gone. You can investigate but that could take months, and the bank is not going to give you pity money to hold you over.

Here's how that same situation plays out on a charge or credit card. Your bank or Amex will contact you immediately - sometimes as fast as 5 minutes after the fraudulent transaction - and offer to cancel and send (or even overnight) you a new card. The charge is disputed, and resolved in 24 hours or less. You smile and go on with your day.

Make sense now? Get a charge card.

A debit card is protected the same way a credit card is protected. If you claim fraudulent charges against it it will take about a week for them to re-deposit the money into your checking. That is all. There is no "too bad, so sad" type of policy on debit vs. charge. I once had my debit card stolen and the card was deactivated and the money they spent was back into my account THAT NIGHT. I also have gotten calls from my bank saying that my debit card has been used in suspicious areas. It was during my trip to Florida via car. So I was charging gas across multiple states when they called. I politely told them it was me making those charges.

Originally Posted by ukrkoz

Reward points usually are for places you never shop at anyway

Not true for me. I can even get cash back that will be re-allocated against my bill or a check that I can deposit into my checking.

Originally Posted by ukrkoz

Your local credit union is a much much better place for emergency loan than ANY credit card. Even your bank.

Agreed. But I think the poster was referring to if your car breaks down and you need a hotel or auto repair. The "loan" he means is because you dont have cash on hand.

Originally Posted by ukrkoz

Debit card gives you same tracking online, times plenty of available free financial software. Microsoft Money or such.

My debit card gives me none of that. Which debit card/bank do you use?

[Tober138]

I use a CC for most purchases simply because it is convenient. Buy gas, gum, groceries, dinner - anything. I don't worry about having to make sure I have cash on hand. I just swipe the card and every month I get a bill and spend 30 seconds transferring the balance from my checking account to the CC company. Although I am somewhat meticulous about the household budget and I am cognizant of what I can and cannot spend so I always pay my balance in full every month and am not spending money I otherwise would not.

Originally Posted by RyanR

Credit cards? They're fine if you pay them off 100% EVERY MONTH. Never carry a balance and never pay an annual fee.

Agreed with the first part. However, with regards to an "annual fee" - that is not always a bad thing. It comes down to an individual cost/benefit analysis. For example, I have a Visa Siganture card that earns Marriott points for everything paid for with the card. I pay a $79/year annual fee for it. In return for that annual fee I earn Marriott points for the stuff I would have spent money on to begin with.

Also, I travel a bit for work (not as much as I used to, but still a fair bit) and I get bonus points for using that card to pay for hotel rooms at Marriott properties above and beyond the points I earn for being a Marriott Rewards member (and my company gives me a choice of using my corporate card or a personal credit card when I travel for work - at the end oif the day I turn in my expense reports and get reimbursed). I average 30-40 nights a year in a hotel for work, at an average rate of $100-$200 per night. Split that down the middle and say 35 nights at a Marriott property at $150 per night - by using my card, that translates into 26,250 additional Marriott points above and beyond those I got just for staying there in the first place (all paid for by my company). Plus I also use that card to pay for work-related flights, rental cars and meals when traveling, so that equals even more points.

All told, I rack up about 50k-60k Marriott points per year solely from the use of that card from personal expenses (money I would have spent anyways) and from spending my company's money while traveling. And it costs me $79.00 to earn those points. Actually I have a second card on that account in my wife's name, which she uses for her business travel as well - so that's probably about another 10k points for year simply from spending of her company's money.

Last year, we spent 5 nights at the Mariott in Aruba, where room rates (for the type of room we stayed in) was $700 per night. Had I paid in cash, those 5 nights would have run us around $4000.00 (room rate plus tax) just for the room alone. Instead we burned 140,000 Mariott points and did not pay a dime.

Assuming (as above) I get 50k points per year off of the card alone, that means 3 years to rack up those 140,000 points. Cost out of my pocket for an annual fee = $79 * 3 = $237.00 Which means I paid $237 for a $4000 hotel stay. Well worth it in my opinion.

I also get a certificate from the CC company once per year good for one night at any Category 1-5 Marriott property. They do get used and I have never used one at a hotel that cost less than $79 per night, so that fee actually pays for itself with that alone.

[Tober138]

Originally Posted by jerseygal4u

I really don't understand when folks have something against debit cards.

I have nothing against them, personally, although I never use my debit card and use my CC instead.

Originally Posted by jerseygal4u

Its like using cash,and it doesn't even affect your credit,unless you spend money you don't have in your checking account repeatly.

Using a CC and paying the balance in full every month is also just like using cash since there are no interest payments involved. Plus it DOES affect my credit, in a positive way because it allows for me to demonstrate responsible use of credit.

Also, some merchants (such as hotels and rental car places) will put holds on a card when using them at their establishments. If one uses a debit card, this hold is on the cash in your account – which means you are unable to access a portion of your money for a period of time even after the purchase is completed (many hotels typically state that it can take up to a week to release such a hold when a debit card is used). With a CC, on the other hand, you may either have an equivalent portion of your available credit on hold (with no impact on actual cash in your account) or sometimes there is no hold at all (I frequently see “temporary authorizations” on my on-line summary of CC activity while in a hotel that matches the room rate and nothing additional).

Originally Posted by ChiGuy2.5

A debit card is protected the same way a credit card is protected.

Not quite, although my understanding is that such protections for debit cards are much better than they used to be.

Originally Posted by ChiGuy2.5

If you claim fraudulent charges against it it will take about a week for them to re-deposit the money into your checking. That is all.

But if you make such a claim on a CC, they will put a hold on payment of those charges until the issue is straightened out. There is no point in time where one has to wait for such funds to be re-deposited. If I have a fraudulent charge on my CC for $1000 – it takes nothing out of my pocket. If it were on my debit card and my credit union was the same as your bank, that would mean my checking account was $1000 lighter and I would have to wait for those funds to be put back into my account.

Therein lies what is (in my opinion anyways) the higher level of protection from a CC vs. a debit card – if there is any issue regarding a charge, be it fraudulent charges, difficulty in getting a refund for a purchase where an item ends up being damaged / not delivered / etc., or anything else – not a single penny ever comes out of my bank account for any period of time while the issue is being resolved.

And while your bank sounds like they handle debit card issues fairly well, the bottom line is this: when there is such an issue with a debit card, the issue involves your money. When such an issue is with a CC, the problem involves the bank’s money.