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Coupon Abbreviations
  • SC = Store Coupon
  • MC = Manufacturer Coupon
  • SS = Smart Source
  • RMN = Retail Me Not
  • PG = Proctor and Gamble
Coupon Terms
  • WYB = When You Buy
  • B1G1 = Buy One Get One Free
  • .75/1 = 75 cents off one item
  • .75/3 = 75 cents off three items
  • EXP = Expiration Date

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Credit cards aren't evil, but debit cards may be.

I posted the article below a few years ago, and you can tell by the comments that it ruffled a few feathers… but with all the issues with Zaycon in the last month this post came to mind.  I have heard from so many of you that paid online with a debit card and the banks won’t refund the money since the purchase was past a certain time frame.  My first response (that I don’t type back in the email) is “Why are you using a debit card online?!!!” after saying that out loud, though only to myself, for 50+ times I thought it was time to repost this.

Originally published Feb. 3rd, 2015:

Yesterday we got the dreaded phone call, “Did you buy $500 in stamps and then make purchases for $400 in shoes in Africa last night?”  Umm… NO!  I give you permission to cry.  I did! Someone invaded our little world and while they didn’t break into the house they did burst my happy little secure bubble.

In the end after a couple phone calls everything is fixed.  The card is closed. A new card is being overnighted to us. Best of all, we are off the hook for all of this person’s stealing.  Things could have not ended so nicely though.  If we had used a debit card things could have ended with me in more tears and us out a chunk of money.

I know everyones favorite financial guru says that you shouldn’t have credit cards, but I would argue that you shouldn’t ever use a debit card.  Ever.  We’ve not used ours in so long I don’t even remember the pin!

As long as you are smart and pay off your credit card every month you should use your credit card for every point of sale and online transaction you make.  Why you say?  Well look at the news recently to see how many point of sale issues stores have had losing data to hackers.  Target, Home Depot, Michaels, Harbor Freight, Sally’s Beauty Supply.. the story is all the same.  Its the little machine where you swipe your card that is giving away your data and in some cases (Target’s) they also have the pin you entered!  It’s not just your card number, though if you used a debit card.  It’s a direct line to every dollar in your checking account.  Even if you got the bank to give you all the money back what happens in the mean time when you have a mortgage payment due?

What are your options to pay safely?
The way I see it you have four choices.

#1 – Pay only with cash.
Reasonable decision but unreasonable to do long term.  Now you are visiting an ATM all the time (also not secure places) or the bank on a very regular basis.  Also if your purse/wallet gets stolen you are 100% liable for the theft and lost all funds.

#2 – Use your debit card.
This is where many of us have been in the last 5-10 years.  Sadly you if your account information is stolen they now have access to all the funds in your account.  With a credit card you won’t pay the bill for 30 days and many times would have caught any fraudulent activity long before you were even billed!

The real problem here is that most banks don’t monitor accounts as heavily as the credit card companies do, so to catch the fraud you have to be diligently monitoring your accounts each day.  If you don’t catch the fraud quickly the amount you are a liable for greatly increases over time.

One thing to also note is the hassle of closing this account if fraud is found.  Your paycheck direct deposits, auto payments to the mortgage and other companies… there is so much that you have to move and change with the account that the hassle can feel unending!

#3 – Use Apple Pay or PayPal.
With Apple Pay  or Samsung Pay the concept is that you enter your credit card information into your iPhone.  Then at checkout in various stores you pay by holding your phone near the contactless reader in the store with your finger on the touch id reader.   You are done in seconds, and you never gave your credit card to the store or ran it through the faulty hacker-prone magnetic strip reader.

There are some problems here though, hackers have found that it is super easy to load a stolen card into apple and samsung pay, so while data you put into is safe, if your data has already been stolen you are still at risk.

If you are paying online you can also choose to use Paypal.  This can even link directly to your checking account!  Your account information is never given to the merchants, and PayPal then takes money out of the accounts you have given them. For fraudulent transactions, or for items you buy that never arrive, Paypal is great to work with and is usually faster than the credit cards on getting your money back!

#4 – Use a credit card.
Before you crucify me for teaching bad financial habits, hear this one out.  You are still at the same risk of having your card information stolen anytime your card runs through the magnetic strip reader but… most credit cards offer ZERO liability if your card data is stolen.  There is no time limit on this like the debit card.

Fast forward here to present day… this also applies to items you purchased and never received.  They will reverse the transaction and credit your account, no matter the length of time!  It takes one phone call and possibly one form filled out and you have it taken off your charges.

Another big reason to choose this over a debit card, most credit card companies have entire departments and programs monitoring the use of your card to help catch fraud instantly.  Your local bank doesn’t have this same level of security.  The credit card company was the one that called us yesterday!

Another Perk of Credit Cards – Rewards

While there are a few debit cards that still offer rewards they are few and far between and not nearly as great as the rewards programs offered by credit cards.  Again if you are smart and pay off the card every month, using a credit card with rewards is the ultimate way to extend your savings with each purchase.

With rewards I would encourage you to think about what you enjoy doing.  If you like to travel then consider airline miles with the Capital One Venture Card or another similar plan, or go for free hotel stays with Marriott points or another hotel chain.  (We have a Marriott card that means 2 weeks of free vacation every year with points we earn!)

Some of the top cards out right now:

Chase Freedom – $0 annual fee earn a $150 bonus right now and up to 5% cashback on select purchases

Discover It – $0 annual fee, cashback match at the end of your 1st year

Capital One Venture – $0 annual fee for first year then $95 yearly, 2X miles on all purchases

Amazon Rewards – $0 annual fee, up to 3% back in Amazon credit.

A friend has the Discover It card and has earned $156 over the last year in cash back that you can put towards your statement bill or get in rewards to Amazon and other places.  Another friend has the Chase Freedom and got over $160 in Amazon credit in the last 6-8 months.  That’s way more than your checking account earns in interest!

One Last Reason – Credit History

Using a debit card does nothing for your credit history and report.  It doesn’t show as an open account or show that you pay your bills on time.  Having a low balance credit card that you pay off every month however does great things for your score.

You may think that you won’t need a credit score/history but your credit score helps you in more ways than getting loans.  Insurance companies pull it to decide your rates (better credit = lower rates).  Car rental companies may also pull your history to make sure they aren’t at risk for car theft.  A potential employer or landlord can also pull your credit!

Tips for Using Cards Smartly

  • Get an empty checking account register book and enter transactions as you make them, also regularly make sure you match by checking your account online.  This will keep you from being shocked by the end of the month bill.
  • Never use a debit card for a transaction that your card leaves your sight (restaurants etc.).
  • Do not pay online with debit cards or checking account information.
  • Set up recurring payments for things online through your credit card, not a debit or checking account.  If you have trouble canceling you can always get the credit card company to take care of it by telling them the charges weren’t authorized.
  • Buy appliances and other electronic items with a credit card over a debit card to get extended warranties.  Many also offer travel insurance for tickets purchased with the credit card.
  • Asking for a new card number and card at any time you are concerned is perfectly fine!
  • Take full advantage of rewards offered.
  • Call and ask them to never send checks in the mail and to freeze your account available balance.  This keeps you from having your limit raised to unheard-of levels, and keeps you from being hit with mail fraud.
  • Pay it off every month!!

Note: In no way am I saying to spend money you don’t have.  This is entirely based on wise spending and safety.

For more reading:

12 Places to Never Use Your Debit Card – Clark Howard
8 Reasons to Worry About Debit Cards – ABC News