Rewards for Debits
I couldn’t really think of a catchy title for this post, however I wanted to touch upon why I use my debit card as a credit card most of the time. There are just as many pros as there are cons to using a debit card versus an actual credit card, but I use my debit card the majority of the time because it’s just easier for me in the long run. One reason I use my debit card is that I earn reward points when I press the “credit” button instead of entering my PIN at a store register. Then, I enter the withdrawl into my Quickbooks program and can usually see the charge appear on my online bank account with a day or two. This is where using a debit card can become a con, if I forget to enter my transaction, I might not be able to view it immediately on my bank’s website. Here are just a couple debit as credit basics that I’ve learned:
- PRO: I use my debit card as a credit card by pushing the “credit button” at a store’s card swiper-thingy. By pressing ‘credit’ I earn reward points that I use towards gas cards. I can usually acquire 4 or 5 $25 gas cards in a year, well worth the $25 annual fee I pay for my rewards program.
- PRO: I pay for the item within a day or two, so I don’t have to worry about having to pay for it at the end of the month. With this said, however…
- CON: Many times the ‘credit’ transaction doesn’t appear immediately on my bank’s website. This means if I am close to my bank balance, I could possibly overdraw because the bank still thinks I have that money in there. I have to be on top of my finances, to the penny. I also have made sure to keep a little extra in my account and have set up an overdraft account in case of emergency.
- CON: I do have a limit to the amount I can spend in a day. Even if I have the money in the bank, most debit cards have a limit to “protect” the customer.
Why don’t I just use a rewards credit card instead, like the Citi Diamond Preferred card? Discipline mainly. I’ve been really good at using my credit cards lightly, then paying them off before they accrue finance charges. However, because I am not a cash-carrying type of gal, I have to use plastic to pay for even small charges. If I had to put all of my charges on a credit card, I just think I’d be leaving myself open to trouble. Since I recently paid off all of my credit cards, I really don’t want to go back to having any kind of balance. I know there are plenty of people who put all of their expenses on their credit cards, only to pay them off at the end of the month. But being a debt-free newbie (or at least with my credit cards), this is dangerous territory for me!
Perhaps in the future, when I become more financially stable, I may use credit cards for my everyday purchases instead. I know that most credit cards have more protection against fraud than a debit card. Yet, my bank has been pretty good about reversing any suspicious charges I’ve encountered.
What do you prefer, cash, credit, or debit? Are there some glaring cons to debit cards that I’ve left out? How many of you use your credit card for everyday charges, then pay it off at the end of the month?
I tend to favor debit cards as well. I like that the money immediately comes out of our bank account, so it’s not a credit purchase. But you are so right about the bank and possible overdrafts. In the past purchases would be declined if it would put you over your limit, but then banks realized they would make a lot of money in overdraft fees if they let everyone use their debit cards as much as they wanted without regard to balances. Its diabolical, really. Prior generations had so many more safeguards for their money; it made saving simpler and easier. Now it’s all about willpower which is very unfortunate.
@Deeanna Campbell – You’re right. Banks have really stuck it to their customers with fees. They’re constantly finding new ways to support their billion dollar industry. Consumers just need to be smarter than that. Thanks for stopping by!
I also rarely use cash, I used to hate dealing with change, losing it in the wash or packing it away in winter clothes, and rolling it up just to deposit at the bank again. With the debit card I don’t have to deal with that anymore (thankfully!). I do have two credit cards on the side, one that is for overdraft protection and the other one has a slightly larger limit for emergencies.
I did notice this at my most recent visit to the bank though, as the CARD Act is getting pushed through, they are peddling a bunch of ‘new and better’ cards with enticing rewards up front. The teller was really pushing the new card, but I just asked for a brochure on it and compared the card to my other ones. And it turns out that the reward percentage is only 1% compared to my 5% with the card I have now! They did show me that my APR for my cards are at around 30% right now, and the new card would have and introductory rate of 7.99% (upon further reading the rate jumps up to about 25%) after 6 months. So, I’m sticking with my current cards.
@George@MoneyLounge.net – Thanks for the information. I just found this article about the new legislation going into practice. Here’s the link.
I did NOT know that you can use debit cards as credit. What would be the difference between debit & credit then? Thanks for this post. I’ll have to look into this further… do you have debit cards that gives you rewards?
All that happens when you swipe your debit card through as credit is that you don’t have to punch in your PIN anymore. The money still comes out of your account right there.
At least with my bank, you have to pay $15/year to enroll in the debit card rewards system. But it has more than paid off since I use my debit card a lot.
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