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Americans rack up $19 billion in credit card debt in one month
(www.newsweek.com)
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this post was submitted on 30 Jan 2024
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There's that, but there are also more legal consumer protections against fraud with credit cards than with debit cards.
Also debit cards don't earn cash back or points. I visit my cousins on airline points. Monitor your cards and make sure you don't exceed your budget, same as a debit card.
They do if you use a credit union. I bank through two, and both offer cash back equivalent to any credit card, multiple overdrafts without fees, higher intrest rates on both checking and savings, access to better loan intrest rates, and I'm keeping my money in my community.
This is not a thing at any credit union around me.
I love my credit union, and while my debit card does get points my credit card gets more points
6% on groceries adds up.
You also have to have credit to get loans. I ran into this issue when I bought a house. I hadn't had a credit card in years because it was too easy to get into debt. The only thing that saved me is I am on one of my folks credit cards for rare emergencies if I'm watching their house and something goes awry (like the dehumidifier shits all over the basement floor and needs replaced).
Do you understand why there are so many incentives to use credit cards? Your reply and those under you are listing why credit cards are the better choice, however I wonder if they all know they are being played.
Those that use their credit card and pay it off in full are subsidized by the number of people that spend beyond their means.
Right. So the extra features are paid for by swipe fees. So why don't debit cards have the same set of features? Because banks want you to use the type of card that has the most return potential. Not wrong, just a difference of opinion.
Receiving a service for free means it is subsidized.
I'm sorry, you have mistaken me for an American.
You have yet to convince me that.
It is obvious that banks have the ability to make more off their users bad choices when using credit cards than they do debit cards. It is also obvious that it is in the banks best interest to push credit cards more than debit cards. Just because you and I are capable of managing our funds well, isn't the case accross all. I worked for a UK bank for 4 years (2004-2008), however the opinion I am portraying here doesn't need any inside knowledge, its just common sense.
I see it glaringly obvious that banks make more money from credit cards than debit cards and therefore offer incentives to use them.
In fact in /any/ business, if one product is being pushed with incentives, its because that product has the best ROI. Its just economics, and the consumer should be aware of that. Nothing is free in this world, and most large companies are predatory.
Yes, it is my opinion, I didn't state that I have hard evidence. I didn't interview a bank CEO.
I get the feeling you think this is a personal attack on you and others like-minded, not at all. I'm sorry you don't see things the same as I do and that is fine, I don't mind. I like to try and learn from these exchanges, maybe not from this one.. yet.
So far I've understood:
That last two points, can you help me understand why banks incentivise credit cards when interchange fees for cards are so similar? Or is that 0.1% the big deal?
Wow Americans really get shafted if those are the rates. VISA and Mastercard in Europe is 0.2% for Debit and 0.3% for Credit for consumer transactions.
Yeah, they could be incentivicing the product that gives them the most return.
Whoa, I think you've misnterprited the spirit of my original comment. Do you take offense to the term "played"? There is no blaming, or shunning of choices, its just economics. The guys selling the product /want/ people to be irresponsible with their finances. They are like "yea, spend more than you have, I don't mind, more where that came from"
I'm not upset with anyone. I think the problem here is the differences between the US and Europe banking systems. In Europe, overdraft fees are capped and the interchange rates are fractional in comparison. But credit cards are still what banks incentivise, and makes me question their motives. I don't trust banks or any large company for that matter to put my own best interests first. I have seen friends and family get into credit card debt over the years. Sure its their bad life choices that cause their own problems. No blaming between different types of people. However no-one denies that banks spread gold glitter on credit cards in an effort to bring in more punters. Debit cards, not so much.
I did learn something today. US banking seems more hostile to consumers than Europe conterparts. Is it because of regulation? I have read in the past that US politics are reluctant to add more regulation to services like banking, relying on "free market" and the lark.
I stand by my comments as you've yet to provide arguments to the contrary.
Yes being played fits. There are people that jump into credit cards and get over their head by spending outside their means. Something that banks enable and it's the reason it is incentivised.
I see you're getting somewhat frustrated. Sorry neither of us could persuade the other. I'll leave it there as I think cultural differences are causing loss of understanding. I hope US banking gets some needed adjustment.
Have a good day/evening.
You’re getting played if you don’t use one. All those rewards are not from the people racking up credit card debt, it’s from swipe fees.
If you don’t use a credit card you pay the same price as the ones paying with a card, except the ones with a card get rewards. The ones without pay extra since stores charge extra to cover the fee
They even lobbied successfully to prevent merchants from passing this on to credit card customers. Which means they pass it on to all customers instead.
The fees are currently capped at 2.5% but that’s just for the swiped. There are other fees as well that end up costing the merchant more.
I would totally use my debit card more if it has the same level of fraud protection that credit cards have.
It'd be nice to be able to do a chargeback on a debit card transaction.
I'm gonna wait and see if you can figure out how your statement relates to credit cards being more profitable for the ruling class than debit cards...