The best method of payment: debit or credit?
Since the dawn of time, man has been riddled with many divisive predicaments.
Good or evil. Paper or plastic. Hero Tabs or ExtenZe.
Yet no quandary has plagued the realm of consumerism quite like this: debit or credit?
And with the news debit card use surpassed credit card transactions in the U.S. last year for the first time, now seems as good a time as ever to find just where we stand on the two north of the border.
Before we officially ask which everyone prefers, let’s address some of the pros and cons of each method:
Credit cards, of course, are the more liberating way to pay.
They promote easy lending (interest-free often up to a month) which is a great tool for many. Spend without discipline, though, and that $19.99 DVD easily becomes a 50 dollar purchase.
Debit cards offer a more conservative approach. Their use encourages you to spend what you actually have – call this the anti-Michael Jackson way.
But what was once the debit card’s greatest asset (the “Insuff. Funds” alert, while embarrassing, never allowed you to spend your way into debt) has disintegrated into a game of how-close-am-I-to-zero?, perhaps more dangerous than spending over your credit card limit.
Many banks now carry insanely inflated overdraft charges (some crazy banks in the States now even ding you $35 per purchase in the overdraft) that can be subject to higher interest rates at the end of the month than your 18%-or-so Visa penalty.
USA Today recently took the debit vs. credit debate to task and, quite understandably, never came to a conclusion. In fact, the only advice it offered was that cash was the best, string-free method of payment.
Yet, who wants to carry cash in 2009? It’s inconvenient by many philosophies, and when you do actually have it, it’s often best to keep it stashed in your wallet for situations (like riding public transit or splitting a tab at a restaurant) where electronic payments aren’t the most convenient.
So, under that premise, we ask: which method do you swear by, debit or credit? Or is a mix of the two the best approach?
By Jason Buckland, MSN Money
Posted by: MrsMat | Sep 1, 2021 9:18:26 AM
I have a fee-free Visa with points rewards, so I put my purchases on credit and pay off at the end of the month. I rarely use debit anymore.
Posted by: Dave | Sep 1, 2021 9:47:37 AM
I use credit, simply because of the incentive programs. The marginal interest earned over 1 month by the consumer in the current interest rate environment is negligible.
Posted by: m. childs-schmitt | Sep 1, 2021 12:26:53 PM
While we hear that interest paid by banks to use 'our' money in vehicles such as GICs is negligable, the interest rate charged on most credit cards has not declined one iota..... I would love to hear someone explain to me exactly what the logic and rational is for that please?
Posted by: Dave | Sep 1, 2021 12:59:05 PM
I prefer Debit simply because i am a business owner and i know other small business owners that get dinged outrages operating charges just to accept visa and mastercard. Debit can be as low as 5 cents per swipe compared to 1.7 - 2.5% of the purchase price visa and mastercard charges. To help local economy and small business, people paying with debit is much better. The convenience and incentives however of the credit card is why most ppl use it simply because they dont have enough money on them at the time or they want to rack up a few points. That debt alone along with the extra costs the merchants are paying to accept it is just making the financial istitutions billions upon billions of dollars annually. We need to get cash back into this world, and not feed the big banks that have total control over our lives. If you dont have the money dont spend it. take out enough cash to get you through till your next paycheque instead of using debit 40 times a month and giving the banks even more money...The monetary system is failing and when countries are trillions of dollars in debt due to the International Bankers taking over Governments, How are we the little people ever going to get anywhere in life..We are set up for debt even more now with technology then ever before. Credit is worse then Debit but we could really do without BOTH!!
Posted by: Secureone | Sep 1, 2021 2:13:44 PM
While I do feel for the merchant who has to pay a large fee for every credit card transaction I tend to use credit cards. For one, no merchant ever offers me a discount for not using my credit card. Reason two, if someone steals my credit card info and charges a lot on my credit card the maximum I am liable for is $50.00 where as my debit card I am liable for the whole amount. Thirdly, if I am not happy with the goods or services provided by the merchant my credit card company will reverse the transaction where my debit card expenditure is gone for good once I use it. I also pay off my credit card every month in full.
Posted by: Rosco Bell | Sep 1, 2021 2:54:25 PM
I use both. Generally, I put larger expenses on the credit card and pay it off at the end of the month (I never carry a balance) and I put smaller changes on the debit. But since my credit card earns 2% rewards on certain purchases, notably groceries, I pay for them with the credit card, then go on line and pay them off right away. It's virtually the same as a debit card but I also get the 2%.
Posted by: FrankTalker | Sep 1, 2021 5:26:19 PM
Debit use has surpassed credit use in the States because all debit transactions are FREE in the States, while they charge 65 cents for each transaction in Canada (unless you maintain an insanely high amount in your CHEQUING account). I always laugh at the poor sucker who uses his debit card for a chocolate bar at the corner store.
I'd rather use my credit card for everything, costing me nothing (even giving me rewards) and just pay it off in ONE debit transaction at the end of the month.
Posted by: credit card | Sep 6, 2021 1:33:21 PM
On my experience, I prefer debit because you are spending your money so they is no interest that you need to pay unlike if you are going to use your credit card and because you are borrowing money from the bank that's the time that your going to pay the interest.
Posted by: Cam Gordon | Sep 8, 2021 10:09:15 AM
If one uses credit cards wisely, it is the only way to go. I have no fee credit cards with reward programs giving me points for every purchase. I bank on line and keep a close tab on my account balances. I pay off my credit card balances in full each month. The bottom line, I pay no fees for the use of the banks money and I gain reward points for all of my purchase.
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Posted by: Free Credit Report Canada | Dec 2, 2021 2:32:01 PM
Looks like the consensus here is credit over debit, and I would tend to agree as long as you're staying within your spending limits. Another added benefit of credit card use is that you get to establish credit and build your credit score, which can qualify you for bigger credit purchases later in life, such as an auto or a home. I believe disciplined, responsible credit card use early in life can actually open a few financial doors that would otherwise be closed or delayed. My 2 cents.