Credit card vs. Debit card

Old Aug 12th, 2002, 07:41 PM
  #1  
Happy
Guest
 
Posts: n/a
Credit card vs. Debit card

I am in final days of preparation for Kiev - Moscow - Germany - S.E. Asia jaunt of several months duration. My financial management approach will be as follows: Retain a nest-egg in a chequing account that I can access via my debit card as back-up. Have my month-end income flow to my Visa CC, and use the CC with a perpetual positive balance. The theory being, I can use the CC with merchants as well as cash withdrawals at ATM's. --- I am having some last minute doubts about this approach. Visa advises me that I can access cash with the CC through ATM's as easy as with debit cards with no difference in fees. Does anyone out there have any insight to this scenario - am I having doubts needlessly. I can just as easy have my monthly income flow to the chequing account, but I question if the debit card is as readily accepted by merchants than Visa CC. Any insight would be appreciated.
 
Old Aug 12th, 2002, 07:50 PM
  #2  
sam
Guest
 
Posts: n/a
I think you may get hit with a cash advance fee, even with a positive cash balance.
 
Old Aug 12th, 2002, 10:00 PM
  #3  
janis
Guest
 
Posts: n/a
Debit or credit card is all the same to a merchant -- as long as the debit card has a visa logo.

The main problem I can see is what sam notes. Every single time you get cash with the credit card you will be hit with a cash advance fee. Whereas, getting cahs via ATM/debit card will only have whatever fee your bank charges to use another bank's ATM.

Most foreign banks don't assess these charges (most places it is illegal to do so) so the $1 - $2 normal ATM fee is all you would pay.

Is there some way you can have some of your monthly income go to both cards? Then you can use your debit card to get cash from ATMs and use the credit card for major purchases.
 
Old Aug 12th, 2002, 10:02 PM
  #4  
Marilyn
Guest
 
Posts: n/a
You could keep your credit card bill down by paying cash which you would get from your checking account by using your debit card.

Or, do you have a trusty friend or relative that you could leave a couple of blank signed checks to pay your credit card bills while you're gone? That's what we've done in the past.

I'd be interested how you solve this as I have never come up with an ideal solution and always have to carefully review upcoming bills before leaving on a 4-week trip. Eventually I suppose we'll be able to pay it all on line, debiting from our checking account on line as well.
 
Old Aug 12th, 2002, 10:22 PM
  #5  
Mark
Guest
 
Posts: n/a
You had better check with your credit card provider again regarding cash withdrawals! Last I heard they all have an initial fee and interest accrues starting immediately. So, get a supervisor or get it in writing. Also, most credit card providers will NOT allow you to pay more than 110% of your balance, or have a credit balance for more than a specified period of time, whereupon they send you the balance by check. When that happens, you'll have only your line of credit available, alongwith a check in your mailbox at home. You should have your month-end income deposited into your checking account. However, highly recommend you have an ATM only card for that account along with your ATM/debit card (note that some banks will issue both, others will not). If your debit card is lost or stolen, someone could wipe out your account in no time. You DO NOT have the same remedies with a debit card as you do with a credit card! Check it out! So, you must keep your debit card secure at all times. If you have online banking with your bank, you can obtain your credit card statement on the web and make payments. Even if you haven't set up online banking with your bank, you can pay most credit cards online at their website, having your payment deducted from your checking account.
 
Old Aug 13th, 2002, 05:33 AM
  #6  
Bob Brown
Guest
 
Posts: n/a
I think the liability issue with a debit card is a real concern because the card can be used without a pin, and the limit of your losses is couched in ambiguous terms. If you carry a debit (check) card, safeguard it like it was your passport.

Another aspect of a credit card is that you can dispute charges that you feel are in error.

I also think that using a credit card, or a debit card for that matter, enables me to carry less paper money around with me. In some areas of Russia, my colleague who travels a lot on business tells me that he carries only a little cash because it is not safe to carry big wads of currency.
If he needs more, he draws out a small amount. He willingly pays the fee his bank charges for each ATM usage after 2 off net accesses because he considers it an investment in his longevity.

I have carried a debit card with me in the past, but I am having second thoughts about it. If we take one along this year, only one of us do so to minimize exposure and risk.

There is no such thing as risk free travel, but there are some actions one can take to minimize the chances of being a victim. (I also realize that sometimes the best is insufficient.)

I honestly think if I got in a situation where my standard bank aTM card would not produce money out of the bank teller machine, I would use my credit card and pay the cash advance fee. Or, I would convert a traveler's check.
(I carry a couple just in case.)

The cash advance fee would be just another trip expense I had to pay for as a precaution.
 
Old Aug 13th, 2002, 06:06 AM
  #7  
cmt
Guest
 
Posts: n/a
I looked into this a long time ago when my bank first came out with debit cards. I avoid them. I think it is much safer to use a traditional credit card and an ATM card. The debit card may allow you the same servies of those two combined, but it has the protections of neither.
 
Old Aug 13th, 2002, 10:01 AM
  #8  
Christina
Guest
 
Posts: n/a
I would also suggest you really get a second opinion from your VISA issuer as to the cost of getting cash advances with a CC. I have never heard of any credit card that gives you cash with no cost, as ATMs do, with only a small ATm-scale fee. That's a loan to them, of course. Even the transaction fee is often much higher than an ATM fee, even if there is no interest charge because of a credit balance. You will pay a transaction fee, they aren't going to let you use a credit card for free, I'd bet anything. Those fees can be 2-3 pct of the amount at a minimum, with no maximum, and sometimes the minimum is $10 or more. So, if you withdrew $300, you might pay $10 or more, whereas with an ATM you'd pay a flat $1-2 or so (or whatever your foreign machine fee is). I've seen a report done by a consumer org. that surveyed credit cards and found the cash transaction fees to range 1-5 pct, but the avg. was 4 pct; in addition, there was a minimum fee in dollars (range 0-$20) and that avg was $5. So, you'd better get clear with your VISA card on that.

The positive balance idea has several drawbacks, along with the one mentioned above about it not being allowed over a certain amount. You can prepay all you want, but it won't change your withdrawal or credit limits. This may not be a problem, but it is possible you could not withdraw your own money because of that, if you needed a large amount. YOu appear to live somewhere other than the US by your orthography, so I am only familiar with the typical CC rules here -- I have inquired about this scheme of prepaying credit cards, so I know what they say here: you still pay a transaction fee for cash withdrawals and it won't change your withdrawal limits.
 
Old Aug 13th, 2002, 11:09 AM
  #9  
Tony
Guest
 
Posts: n/a
Prepaying your credit card may not work. The credit card company may refund (mail you a check) for your overpayment. Better way to set it up is to have the credit card company automatically debit your checking account for payment. This way you can also use your debit card to get cash whenever you need it. Debit card fees are generally less than credit card cash advance fees and cash advances automatically charge interest from the date made until paid.
 
Old Aug 13th, 2002, 11:12 AM
  #10  
Anne
Guest
 
Posts: n/a
You will definitely be charged a cash advance fee if you use your credit card to get cash from an ATM. Interest starts accruing immediately.

Many banks today offer the same liability protections to debit card transactions that are signature based (as opposed to PIN) as they do for credit cards. I know that my bank does (as part of its efforts to get customers to sign for transactions rather than use their PIN... the bank makes more money that way).

My plan is to use my cc for everything I can charge (since I don't carry a balance, interest is not an issue). Debit/ATM card for cash. I will be gone when my bill comes, so I will simply sign online at a cyber-cafe and pay my bill while I am in Europe. Much simpler than a few years ago, when I had to go the "leave a check with someone" routine.

Bottom line...check with your bank and credit card co. about online bill pay abilities and debit card liability protection.

Good luck!

Anne
 
Old Aug 13th, 2002, 12:23 PM
  #11  
mpprh
Guest
 
Posts: n/a
Hi

This isn't directly comparable !

European banks tend to issue debit cards only. UK has the cc mentality (buy this month, pay some of it by end of following month) which is great for unexpected costs on holiday.

When I draw cash abroad on my debit card, I get the same charges as with a credit card.

Peter
Languedoc, France
http://tlp.netfirms.com
 
Old Aug 13th, 2002, 01:12 PM
  #12  
Bob
Guest
 
Posts: n/a
Set up your checking account for online access for bill paying and your credit card for online access.

That way you can check your credit card bill statement online at anytime and then send the money to pay from your checking account. I have been doing this for about 5 years and it works great.

You can also set up all your bills to be paid on specified dates and then leave town...the computer handles the bills on the day you tell it to. Your bank can tell you how to set all this up. If they do not offer it you are at the wrong bank.

I overpay my credit card many times. No check has ever come back and the company takes the full amount as it usually is less than I have on the unbilled portion anyway.
 
Old Aug 13th, 2002, 02:14 PM
  #13  
carol
Guest
 
Posts: n/a
There have been people who have been charged up to 30% for using a credit card, even though it is not allowed. Debit cards may only allow a daily max. withdrawal, or machines may be set up so they only give a certain amount of money.

What is this about using a debit card without a PIN? I don't think so! It will be taken away immediately!
 
Old Aug 13th, 2002, 02:18 PM
  #14  
Jen
Guest
 
Posts: n/a
A debit card that can also serve as a MasterCard is used without a PIN for MC purchases, though one is needed when it's used in an ATM.
 
Old Aug 13th, 2002, 02:34 PM
  #15  
xxx
Guest
 
Posts: n/a
carol, honey, What about all the times you've used your debit card like a credit card to make purchases. No PIN!
 
Old Aug 14th, 2002, 10:59 AM
  #16  
Happy
Guest
 
Posts: n/a
WOW, Thx. for all your replies folks. I immediately called Visa to check on that issue mentioned by some of you regarding Visa not allowing a positive balance under some circumstances, and mailing the balance to your home - gulp! That would be a problem - the cheque sitting in my mailbox....... Visa assured me they would only do that if the CC is inactive for an extensive period of time. That will not be a problem for me, because I will have $ flowing into it monthly, and will obviously be using those $ daily. They reassured me again (2nd. representative to do so in last several days) that only the $2.00 fee applies for obtaining cash at ATM machines, same as debit card. It would not technically be a "cash advance" as money will be drawn from a positive balance. At this point therefore, I have not received information that would dissuade me from this approach. Once over there, I hope "facts" dont confuse me. If this approach proves to be impractical, illogical or whatever, I will inform this thread. Thx again for your input - it prompted an immediate call to Visa, which clarified things even a little further - at least assured me that I am not out-to-lunch on this approach.
 
Old Aug 14th, 2002, 12:01 PM
  #17  
Christina
Guest
 
Posts: n/a
Good luck, that does seem to make sense for you. I would like to know what bank and country you have a VISA credit card with that lets you take out cash without calling it a cash advance, and others might also, unless it's a foreign bank. I know my VISA bank (Citibank in the US) said they will not do that because I've queried them on that--they consider it a cash advance because they are delivering cash to you, that's the product and service, whether you have a balance or not. Anyway, that's what they told me, although they admitted there would probably not be an interest charge if you had a balance.

So, I think a lot of folks might be interested in the bank and card you have as this sounds like a decent idea for long-term travel.

I hope you enjoy Russia.
 
Old Aug 14th, 2002, 12:43 PM
  #18  
mpprh
Guest
 
Posts: n/a
Hi

At one time I had a Co credit card, MC in fact.

I was due to stay in USA for 3 months.
Before leaving, I put a 10,000 USD credit on the card with no problem.

Peter
 
Old Aug 14th, 2002, 01:25 PM
  #19  
carol
Guest
 
Posts: n/a
I have a debit card and also a credit card that can be used for cash withdrawals. I have never been able to use my debit card without a PIN. When purchasing in restaurants, gas stations, retail stores, I have always had to use a PIN.

If it does not need a PIN, it is a credit, not a debit transaction. That is why it is called a debit card and not a credit card. Cards used for credit are credit cards! You pay for the cash advance, and they secure your card by charging for this.

Either way, if you are using a credit card you are protected from theft by the card company, and if you are using a debit card, you are protected by your PIN if you keep your PIN secure.

If you want the security of a debit card and charges that likely won't exceed $5 a transaction, get a debit card. If you want to pay up to 30% charges in a foreign country, use a credit card.
 
Old Aug 14th, 2002, 03:40 PM
  #20  
Anne
Guest
 
Posts: n/a
Carol, actually, you can use a debit card without a pin. Many ATM cards are now co-branded with a VISA or MC logo. You can make transactions either PIN-based or signature based. If someone has your card, they can choose "credit" and sign the slip. Money comes out of your checking account as it is really a debit card.

Merchants prefer PIN based, because the exchange fees (expense to them) are lower. Banks prefer signature based, because the exchange fees (revenue to them) are higher! To encourage customers to choose signature based transactions, (thereby earning more fee income), many banks offer zero-liability protection in the event of stolen cards or fraudulent transactions. In other words, if you didn't do the transactions, and you report it to your bank (same as you would for invalid credit card transactions), you suffer no loss (not even the $50 you do for credit cards).

Check with your bank to see if they offer this protection. When I do use my debit card to make a purchase (because they don't take checks, or AMEX, my only cc), I always sign, therefore am protected.

Like everything, there are choices. As long as consumers are informed, they can make the choice that is right for them! Just make sure you know what protections your bank offers with your particular debit or credit cards.

Hope this helps

Anne
 

Thread Tools
Search this Thread

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Do Not Sell or Share My Personal Information -