[Twisol]

Setting your incredulity aside, I'm curious why you think using a debit card would be so shocking. I effectively don't use a credit card at all: I use a debit card (or an equivalent Apple Pay representation thereof) exclusively. From my perspective, if I want something and I have the money, I'll pay for it. If I want something and I don't have the money, I won't pay for it. I don't often want things outside my budget (and I am not well-off, as a grad student), so I don't often feel any pressure to amortize the purchase over time with a credit card. And I prefer that state of affairs, because I don't want to get in the habit of using someone else's money if I can't afford to pay them back.

This isn't a value judgment on people who do use credit cards. There are plenty of reasons why using a credit card by default would be appropriate, and I'm not shocked to hear of someone who does so. But I am curious where your shock comes from, so I shared my story as a data point.

[ipsento606]

Credit cards are many products rolled into one.

Despite the name, many people use "credit cards" simply for rewards and enhanced purchase protections, with only incidental use of the credit facility.

In the US market, it is surprising that someone would choose to use a debit card over a credit card (if they have the choice) because they are giving up the rewards and enhanced purchase protections, which are available at effectively zero cost.

If I used a debit card over a credit card, I'd effectively be paying ~2% more for most things I buy, for no benefit.

[xp84]

Not to mention the grace period. Especially with high interest rates, it's another perk to have thousands of my dollars stay in the bank all month while my credit card bill piles up. This matters less when rates are super low.

[pc86]

One thing I didn't truly appreciate until my wife and I consolidated our spending and had children - having nearly every expense flow through a credit card puts total spending into perspective without having to look through bank statements or keep up a spreadsheet. Getting a $10k bill when you're expecting $8k (or a $30k bill when you're expecting $20k) can be a pretty jarring event and is a built-in monthly touch point to review budgeting and spending.

It wouldn't be quite the same impact spread out over 5 cards paid out of multiple checking accounts with slightly different billing cycles.

[tstrimple]

> One thing I didn't truly appreciate until my wife and I consolidated our spending and had children - having nearly every expense flow through a credit card puts total spending into perspective without having to look through bank statements or keep up a spreadsheet.

This can work amazingly well for some folks. And can be a spiral of debt for others. This is generally good advice if you can and do actually pay off your credit cards every month. This gets quickly out of control as soon as you don't or won't for one reason or another.

[cosmic_cheese]

Better fraud protection, too. Depending on the bank it can be a real battle to get fraudulent charges dropped and funds restored, but credit card companies go out of their way to make that process easy. Some even offer it as a function of their site/app so you don’t even need to make a call to get things resolved.

I have several cards and don’t keep a balance on any of them. They’re a tool with several uses, and one of mine is to be able to pay for things without exposing my debit card/bank account.

[apazzolini]

Because you're leaving 2-3% on the table for every transaction. Using a credit card doesn't mean you can't pay it off in full every month, costing you zero in interest, while taking advantage of reward programs.

[wilcoooo]

On top of all the benefits, if for some reason you get hit with fraud or scammed on a debit card, it's a lot harder to get that money back. Credit is an extra layer of protection.

[Twisol]

I've heard this, too, and it's a good reason to use a credit card at least for significant purchases. But I'd rather see those same protections extended to debit cards. I wish I understood why they aren't.

[Spooky23]

The fees that fund those protections don’t exist on the debit card.

It’s also fundamentally different. There are protections, but they depend on you being aware of the activity to avoid impact. Basically, in the event of fraud with a credit card, Chase or AMEX have a problem. With a debit card you have a problem until the resolve it. In the meantime, your payments and checks may not clear or hit overdraft.

As long as you can control your spending, credit cards are a real superpower for consumers.

[Twisol]

I have heard this, and it is probably a flaw in my approach to purchases. But is that really justification to ask "who in the world uses debit cards"? I still feel more comfortable not being on the hook to somebody, and the organizations that extend lines of credit don't do so as a prosocial program, certainly. (Just because some people can safely make use of credit doesn't mean everyone can. I know someone who has unfortunately made poor use of their credit card, and I don't necessarily trust myself to avoid a similar fate.)

[BenjiWiebe]

No, credit card companies aren't giving out rewards at a loss. Better cards have a higher interchange rate, ie the merchant pays more fees to accept a good card.

Hence why cash discounts are a thing (and yes they're legal again).

[Sn0wCoder]

You do realize that 2-4% is not left on the 'table' its taken from the merchant you are shopping at. If you are at a big box store sure but when going to local merchants its best for them if you use debit or cash. One could argue the merchant 'choose' to accept CC but in this day and age its more like extortion because the CC lobbyist were able to make it illegal to pass that charge onto the customer.

[herewulf]

Don't you think the 2 to 4% is built into the prices of every merchant that accepts credit cards, big or small?

It's not a great system but it's what we have so using debit instead of credit does mean losing out.

[Sn0wCoder]

At the big box stores absolutely they have it worked in to the prices. I have no idea if the local mom and pop shops are working that 2-4% into their prices or not.

[phil21]

Mom and Pop stores are basically the only places left that reliably give you a cash discount for not using a card. Sometimes advertised at checkout, sometimes you need to ask.

Especially service companies. They tend to quote out "cash" (aka check/bank transfer) price and then add another 5% or so if you want to pay via card. There of course is very often an even cheaper "actual cash" price too you need to ask for if you are so inclined.

[tyre]

Yes, they do. They understand where their margins go and the fees on credit cards are a huge one. They simply don’t have much of a choice.

[Twisol]

I had this thought as well. I didn't want to raise it myself, because I don't have any personal evidence that this is the case, but of course the "cash back" has to come from somewhere.

[phil21]

> the CC lobbyist were able to make it illegal to pass that charge onto the customer.

This is no longer a thing, there was a settlement with Visa/MC that removed this provision from their merchant contracts. You are now allowed to pass on transaction fees if you feel like it as a merchant.

It was also never illegal. It simply was part of the contract to do accept Visa/MC/Amex and they'd close your merchant account if you got caught doing it.

[blonder]

Handling cash costs money too though. I know some small business are credit/debit card only since they do not want to deal with the hassle of cash. Out of everywhere I have been, only one place (some grocery chain in SLC) has accepted debit cards but not credit cards.

[direwolf20]

In some countries they simply outlawed such high fees, merchants pay lower fees and there's no cashback.

[steveBK123]

You are young, you want to use a credit card to protect yourself and build credit history.

Using a debit card, in the event of fraudulent charges, the money is already gone from your bank account and now you are negotiating with your bank to get it back. With a credit card, you file the claim and its generally resolved before your statement closes and anything is due. Your card will also be immediately cancelled, so if its your debit card you will lose ATM access while awaiting the new card.

This will happen to you many times over the course of your lifetime, maybe every 5-10 years. Usually when a number is stolen, they speed run getting as many $1000s of charges in before the card is stopped, which would drain your debit card account.

Credit history is also important. If you don’t have a credit card and build basic credit history before your first job, you will have trouble signing a lease without a parental guarantor.

[marssaxman]

That has not been my experience at all. I've been using debit cards for all my everyday non-cash purchases for about thirty years now, and it's worked just fine. I expect to keep doing it indefinitely.

I have had exactly one encounter with fraud: a vindinctive ex-girlfriend stole my card info and had herself a little shopping spree, emptying my checking account. I walked into the credit union branch, filed a report, and walked out with $300 and a new card. All the stolen money was restored within a few days. It was not a big deal.

[steveBK123]

> All the stolen money was restored within a few days. It was not a big deal.

You just agreed with my premise but that in your case the dollar amount was low enough to be inconsequential. If someone ran up $5k of charges on your card right before you needed to pay rent/mortgage/whatever, this would have been far more annoying.

Also - credit card protects you from this scenario, for free, or in fact pays you money with any of the cash back cards.

[marssaxman]

The $300 I mentioned was just walking-around money, meant to get me by while they investigated. I don't remember the exact amount that was stolen, but it was not far below your hypothetical $5k. The fraud was inconsequential not because it involved a small amount of money, but because the credit union took care of it promptly, with minimal fuss.

> credit card protects you from this scenario, for free

Sure, but using a debit card issued by my credit union also protects me from this scenario for free, with no risk of getting in debt or having to pay interest. That feels safer to me: fraud is rare, but debt is common, so I'd rather protect myself against debt.

[Spooky23]

You’re lucky. My colleague had his skimmed at a gas station and his bank froze his funds, causing his mortgage, car loans and other stuff to bounce. Major PITA.

[marssaxman]

I'm not lucky, I just don't use commercial banks. I had to get screwed over a few times before I learned that lesson, but it did eventually stick.

[phil21]

Eh, using a credit union is really no less risky - from personal direct experience. It's luck of the draw.

I have no experience with small commercial banks though.

[blonder]

May I ask why you eschew the basically free money that comes from credit card rewards as a responsible credit card user?

[marssaxman]

Is it really free money? Actual cash? I've always seen rewards programs advertised in terms of discounts on specific products or services: consumer electronics, cruise vacations, furniture, gift cards, and other things I rarely spend money on. I expect it to be an overstock clearinghouse, something like the old Columbia House record club, where you would page through a catalog of random stuff looking for anything you could convince yourself to settle for, just because you'd already paid for the subscription. It sounds like a hassle and I'd rather ignore it.

[matwood]

Maybe it once was like what you're thinking, but not anymore.

There are fee free cards that give cash back as statement credits (AMEX Blue iirc). No limitations on what you can spend it on. The Apple Card does 2% cash back which you can just transfer to your bank account.

The Amazon card requires a Prime membership, but gives 5% back on anything bought at Amazon. I bought my last TV using the 5% back I had received.

Then there are top tier cards like the Chase Sapphire or Cap One Venture X that have yearly fees. But, if you take 1+ trips/year they immediately pay for themselves and more (credit for global entry, yearly statement credit for travel that almost equals the yearly fee, lounge entry, etc...). I routinely use points from the Venture X to cover travel expenses like tickets, rentals, hotels, eating out, etc...

[hibikir]

Yes, there's quite a few that just give you actual money: You can get a check back. You often get a better return if you instead purchase things at a specific retailer or something like that, but it's not all gift cards and discounts.

[QuiEgo]

If you hold $100k in Bank of America (or a linked Merrill Edge account), they will give you up to 5.25% cash back for their credit cards in certain categories, and 2.62% unlimited.

https://frugalprofessor.com/bank-of-america-customized-cash-...

To your point, it's not free money at all: the credit card companies are collecting fees, and the merchants are passing them on to you. This is a way to claw a part of that back - if you don't use a rewards card, you're paying _even more_.

[vl]

Yes, on some credit cards it's actual 2% cash - Apple Credit Card, Fidelity.

Amazon gives you 5% back for using their credit card, it's criminal not to use it.

If you buy a lot of equipment or expensive equipment - B&H credit card covers sales tax! I.e. 10% for my area! (I don't use it since I don't buy that much, but still it's an option)

[Spivak]

Yes literal dollars I can spend anywhere. It can even be deposited into my bank. For doing nothing at all except paying my normal expenses via my 2% cash back card I get $400-800 annually.

I know I could probably min-max this into more by juggling different cards for things like Amazon and Costco but I'm lazy and don't want to think.

[tempaccsoz5]

This varies a lot between countries and cultures.

For example in New Zealand, EFTPOS cards are very popular (similar to debit cards, but issued directly by our banks so no user fees ever - the merchant pays for the machine and that's it). People usually have all 3 - an EFTPOS card for most in-person purchase (although online EFTPOS is gaining adoption), a debit card for online or paywave-only places, and a credit card for large purchases/ emergencies. Credit cards here are highly unpopular among the under-25 age bracket; most young people just have EFTPOS and debit.

I think this might be a result of our stricter banking regulations compared to economies like the U.S.; it's difficult for banks to offer tempting enough rewards schemes to entice people to credit cards. Additionally, there is much less of a borrowing culture - most people will only ever properly borrow money once - buying a house. Paying cash for cars is the norm, and purchasing anything else on finance is seen as stupid compared to just saving the money (and earning the interest yourself).

[Twisol]

I am young, but not so young as that. I do have a credit card, I just don't use it for anything except the monthly cost of server hosting (to keep it in use). Despite its disuse, I have an "exceptional" credit rating, probably mostly due to the age of the account. So I appreciate the point about credit history, but my habit of preferentially using debit doesn't seem to have been to my detriment on that front.

As to fraud protection, I agree, but as noted in another reply, I wish I understood why the protections afforded to credit don't also apply to debit. There must be some systemic reason for it that I'm unaware of. As it stands, my best guess is simply that "it's a perk to entice people to use credit".

[xp84]

The reason is just that it would be more risky, I think. Compare the scenarios:

1. Scammer clones your credit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The funds are actually not given to the store for a bit given that credit transactions take a while to settle. Upon the dispute, the store now needs to prove that you were there and bought those clothes to get their $500, or else the bank/Visa won't pay them.

2. Scammer clones your debit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The store already got paid though. The bank doesn't want to give you another $500 in case you are actually in on the scam, then they'll be out an additional $500. Eventually assuming they can't prove you actually bought the clothes, I think the store would have the $500 confiscated, but usually you're still liable for $50 if you reported it quickly enough, but could be more if you take too long to report the fraud.

Of course debit cards can easily be converted to even easier-to-launder money substitutes, too.

[tempaccsoz5]

So the protection is that debit cards take longer to pay out to merchants? An increased window to dispute charges doesn't strike me as innovative but more like an arbitrary variable from the CC company.

[kelnos]

No, the protection is that when you pay with a credit card, no money has left any of your accounts, and you have plenty of time to dispute the charge before it does.

With a debit card, your money is out of your account, immediately, and you have to fight to get it back. For some banks, for some accounts, this isn't a big deal, and you might have it back in a few hours. But for others it might take weeks, and in the meantime you've failed to pay your rent or mortgage.

[weird-eye-issue]

Because I get 2 to 3% back on every single purchase and I have my account set up to automatically get paid off every month so I've never paid a fee or interest for a credit card so I basically get free money, extra protection, and better credit just for using a credit card, that's why.

They make money off people who pay interest so I just take advantage of that.

[marssaxman]

I do the same - I use my debit card for everything, all the time. If I don't have the money to buy something, I'd rather just wait until I do; credit cards make it too easy to spend money faster than I earn it.

People who like to tell other people they shouldn't use debit cards often cite fears of fraud, but that's really never been a problem for me.

[greyw]

Credit cards are strictly better in all aspects (rewards, protection, free working capital, etc) UNLESS you are bad with money/finances.

So there is actually no good reason to use debit cards. I say this as a former user. Makes no sense at all once you think everything through.

[lotsofpulp]

I find my usage of credit cards shrinking every year in the US. It's pretty much narrowed down to non Target retail, travel, and restaurants.

As the sellers get bigger and bigger and electronic cash payments become more normalized, I think we'll see more and more sellers charge at least 3%, if not 5% extra for credit cards so that all of their merchant fees and chargeback risk are covered.

Right now, it's just a bet that having the same price for credit card and non credit card will result in sellers willing to pay a higher price (a psychological phenomena), but more and more sellers are not betting on that.

I wonder if the effect of people being more willing to pay higher prices is seen in discretionary purchases, so travel/non staple retail will continue to incentivize credit card usage, while most other businesses will not.

[Spooky23]

It’s shocking to many because there are so many downsides to using them. Only the merchant benefits.