[kondbg]

Using debit cards means that you need to keep a sufficient balance on a zero interest checking account in order to make transactions.

Using credit cards allows you to keep close to a zero checking account balance and manage your own cash flow, since credit card bill dates are deterministic.

Why would anybody want to keep _any_ amount of money in a non-interest bearing checking account right now especially when the risk free rate of interest (US treasury bills / equivalent money market funds invested in US treasuries) yields 4.00%+ APY now?

[lxgr]

> Using debit cards means that you need to keep a sufficient balance on a zero interest checking account in order to make transactions.

Many banks allow linking a savings account to a checking account as a backup funding source.

> Why would anybody want to keep _any_ amount of money in a non-interest bearing checking account right now

Conversely, why would any credit card issuer give you an interest-free loan for a month in a world of 4.00%+ risk-free APYs?

Leaving aside all concerns of repayment risk, somebody is paying for your interest-free loan already.

Depending on how you view it, that's either yourself (via 2-3% of credit card fees baked into all retail prices) or other credit card users that don't pay their credit card bills in full every month, or a combination of both.

[scarface74]

> Many banks allow linking a savings account to a checking account as a backup funding source.

And the average American can’t handle a $400 emergency. They don’t have a savings account with thousands of dollars

[lxgr]

True, but how high is the chance that somebody that can't handle a $400 emergency today will be able to pay back $400 of credit card debt next month? And if they don't, they usually end up in more problems down the road.

Also, there is nothing that says you couldn't use a debit card for normal spending and resort to using a credit card only for when you actually need credit (assuming that the rewards inefficiency gets fixed).

[scarface74]

I was answering in the context of the difference between chargebacks on credit cards vs debit cards. You aren’t out of your money while waiting on a chargeback to be processed when using a credit cards.

[lxgr]

You're out of $400 of liquidity (until the issuer provisionally credits your account, which they are required for credit and debit alike) either way.

The only difference is lost interest payments for these ~5 business days (which the issuer might even have to reimburse as well; I'm not too sure about that though), as well as not being able to pay for cash-only expenses using the money in your bank account.

Also, nobody is saying that people can only have one single bank account, and a debit card linked to it with no spending limit attached to it.

[scarface74]

Few people with decent credit have a card that has a credit limit that comes anywhere near their monthly spending requirements.