Debit -> Not Credit

[Dr. Shane]

Visa's debit card transactions overtake credit cards

Quote:

In an economy that is encouraging more thrifty behavior, consumers are turning to their debit cards instead of their credit cards at record levels, says Visa.

According to an April 29 report from the credit card network, the total dollar volume of purchases made with Visa debit cards at the end of 2008 was larger than the amount spent on credit card purchases -- the first time debit purchases surpassed credit. Visa's 2008 fourth-quarter debit card transactions made up more than 50 percent of the company's volume, compared to 40 percent during the same period in 2003.

[True-believer]

I'm not surprized by the outcome.

[phkrause]

This is just a thought, I wonder if that's why the CC issuers are upping there rates because less and less people are using there CCs and using the DCs instead?

pk

[bonnie]

This is just a thought, I wonder if that's why the CC issuers are upping there rates because less and less people are using there CCs and using the DCs instead?

pk

The news reported less and less people are paying their bill and have charged to the max

[carolaa]

It really doesn't matter if you pay by debit or credit as long as you end up even every month. It's more tempting to overspend when you use a cc, but it's also more safe. That's why I switched and now use cc almost exclusively over dc.

[Gail]

The system works differently in the U.S. than it does here, but I think that an American debit card turns into a credit card if there is not enough money in the account. Am I understanding that right?

Here, if your account doesn't have enough funds the transaction won't go through. You will get a message saying, Insufficient funds.

[Stan]

Does it say insufficient funds? or is it just declined?

[Gail]

Hmm... yeah, you're right. Probably just declined.

[GreatLakesGramma]

It's the same here Gail. If you use up your balance, you can't use the card.

[phkrause]

Yes its the same here in the USA, it will say rejected. Because its coming directly from your checking account.

pk

[Dottie]

I got a new credit card for an account that I don't use, and it has been sitting on my desk, unactivated for several months. When I called yesterday to see what the rate was, I was told that it was 9.9, so I activated the card, as that is a little lower than one of my other cards.

The last statement I got from that credit card company had a rate of 24.9, which is why I hadn't activated the card.

I only use my credit cards once in a while for incidentals, unless I travel, then I know I always have a backup. One of them has a limit of $30,000.

[GreatLakesGramma]

Why does it matter what the interest rate is if you pay off your balance every month? I don't even know what the rate is on mine.

[Dottie]

Because I use the card for higher expense items and things which are covered by the guarantee on the card. It is a lot easier to get money back if an item is lost or breaks, etc., when one can challenge it through a credit card. Some retailers make it very difficult to return or exchange an item that is defective, etc., if it has been paid for with cash or a check. Have your ever tried to return an item at Target?

[GreatLakesGramma]

No, I don't shop at Target. We don't have one in our little town. We have K Mart and WalMart, but no other chain retailers. They are both good about returns, as are all the local merchants. I really can't think of any bad experiences I've had trying to return something. Only the time when my husband returned something to Wolohan and they insisted on crediting it to the same card we had charged it to, even though my husband told them the account was closed.

[Dr. Shane]

Why does it matter what the interest rate is if you pay off your balance every month?

Some cards will charge interest even if the balance is paid every month. The card companies like to play games by continuously changing the rules.

What happens when you lose your job? Or your car's transmission goes out? Or you have to buy an unexpected plane ticket to attend a relative's funeral? Or the furnace goes out? Etc, etc, etc? What happens when you can't pay the balance in full one month? How many people with credit cards have always paid their complete balance every month and never paid less on even one occasion?

[GreatLakesGramma]

If our credit card company ever starts charging interest even when we don't carry a balance, I will close the account.

Otherwise, the interest rate doesn't matter to me because I will never charge anything we don't already have the money to cover. If my husband ever does, I will take away his credit card. And in case of job loss or any of the other things you mentioned, I would never, ever use a credit card as a loan source.

We took out a home equity loan when we had to put in a new septic system in our heavy clay soil, at a cost much, much higher than we expected or were prepared for. It came with a much better interest rate than any credit card.

[Dr. Shane]

If our credit card company ever starts charging interest even when we don't carry a balance, I will close the account.

What some cards have done is give a customer five, ten or fifteen days interest free after a purchase. So interest could start to be charged before the customer even gets the bill. The customer can avoid that by paying online the same day as making the purchase.

Credit cards normally change terms when a customer's credit rating changes. So, for example, you may pay your credit card on time every month and you may pay off the entire balance. Then you pay late or miss a payment on a different account - maybe your home mortgage or car payment. That will impact your credit rating and even though you always pay your card on time and in full, the card company can reduce your debt-free period from 30 days to 15, 10 or 5. They do have to notify you before the reduction going in place but they are often times tricky. They will notify you by putting it on the back of your statement in small print or some similar trick. These are not nice and friendly companies. They look for every way possible to take advantage of their customers.

[Dr. Shane]

We took out a home equity loan when we had to put in a new septic system...

Something like that may be necessary but one should try to pay off that loan like an antelope running from a lion. "Give not sleep to thine eyes, nor slumber to thine eyelids. Deliver thyself as a roe from the hand of the hunter, and as a bird from the hand of the fowler." (Prov. 6:4, 5)

My wife and I are working at paying off the rest of my student loans and our home. We are paying extra payments on these to pay them off quicker then scheduled. We have a $1,000 emergency fund but once we are debt-free we will increase that to $10,000 and park that in a money market account.

The only bills we want to worry about are:

• Taxes
• Insurance
• Utilities
• Church school tuition

We don't want:

• Car payments
• Credit card payments
• Mortgage payments
• Student loan payments
• Financed furniture payments
• Over due medical payments

We want to be free. Free to build wealth and free to give to the ministry. I don't want to be paying any interest to anyone. My only relationship with interest should be the amount my money is earning me in various investments.

[GreatLakesGramma]

Something like that may be necessary but one should try to pay off that loan like an antelope running from a lion.

I agree. I agree with the rest of what you've said too, except I would really, really, REALLY like to not pay utilities either. But wind generators are too expensive, and my electrician husband is not willing to pump water by hand, bathe in a washtub with water heated on a wood stove, etc., so I'm out of luck on that one. I let my subscription to Mother Earth News expire 20+ years ago, when I finally realized I was never going to get any cooperation from him on even the tiniest thing.

Anyway, now that I have become dependent on electronics I haven't figured out how I'd keep my laptop running or my pocket PC charged without power to the house.