Credit cards are great for all the reasons you listed, but there is rarely a good reason to carry a balance and pay the exorbitant interest rates on one.

You can get all those benefits while still paying the balance in full each month and paying 0 interest, even using the time until the next statement as a free 30-45ish day loan.

There's another advantage for paying with credit cards that you didn't mention.

It builds credit and increases your credit score.

When your credit score is higher you pay less in interest on loans. That means credit cards actually save you money if you are not carrying interest each month.

A) Opt out of "overage fees and bounced-check insurance" which would be the problem here, not debit cards. Keep track of your own finances.

B) Don't live check to check. Keep track of your own finances.

C) And if you fail to do that once (because you're probably living check to check), you've nullified any free benefit you ever received.

D) Horseshit. I had my card stolen by the Target breach, there were charges on it all over Europe, and within a week I had every penny back.

> D) Horseshit. I had my card stolen by the Target breach, there were charges on it all over Europe, and within a week I had every penny back.

Let's say that week happens to be the one when your rent/mortgage is due, your car payment is due, your student loan payment is due, etc. It doesn't matter that the money goes back into your checking account eventually, if it's not there when it needs to be, you get hit with overdrafts, bounces, late fees, marks against your credit history. Those aren't things you can just "opt out" of.

Using a credit card is a useful layer of indirection and buffer.

I don't live check to check, and I don't keep all of my cash in a single checking account.

edit: I guess keeping cash surplus to my immediate needs in a savings account is opting out?

Maybe I'm not expressing myself directly enough: when you overdraw your checking account, it's the latest mistake of a long series of mistakes. If having a paycheck delayed for a week causes you to have a negative net worth, you should reduce your expenses or get a better job.

Its very easy to say that when you are a software engineer who comes from an upper middle class background.

I'm not saying some people are not irresponsible but real financial strain is a tough thing to get out of, especially when you were born into it.

It's always better to have problems with somebody else's money when your contract scopes your liability narrowly. Even if I follow your advice and do A, B and C, D is still a problem that I need to deal with.

Case in point. I had a two-week hotel stay and facility booking at a resort on my AMEX. The hotel fucked up and double-charged me for the event -- to the tune of $20,000. Due to their obtuse bureaucracy and overall stupidity, it took two weeks to get the issue resolved.

In the debit card scenario, I'm stuck with a $20,000 liability immediately upon the hotel screwing up. I don't keep a five-figure balance in my checking account, so that's a problem until I notice that this event has happened. (Which I may not, because I'm on the beach enjoying my honeymoon and not checking my mail).

With the credit card scenario, I get back from the event, open my mail and discover a $40,000 bill instead of a $20,000 bill. Nothing is bounced, everyone is paid, nobody is angry at me. I make one phone call to AMEX, dispute it as a double charge, and my risk (and work) is done.

Am I wrong, or wouldn't exceeding your credit limit have exactly the same effect?

Worst case, $50 fee or whatever, which would be waived during the dispute process.

Having x credit limit costs vastly less than x cash in a checking account.

What I meant is that if you have a lot of things scheduled to be withdrawn from your bank account, and some sort of fraud or double charging happens, chaos ensues (as above.)

If you had a bunch of things timed to be taken from a charge account, and you exceeded your credit limit because some sort of fraud or double charging happens, identical chaos would ensue.

edit: and there's certainly not a vast difference in carrying $20K of credit and $20K in cash. We live in a world of negative interest rates.

Negative interest rates are a non issue if you have any debt, just pay down your house etc faster.

The problem is errors are random so your 'solution' is to keep huge amounts of cash in your checking account to deal with random error.

But, if I max a CC I would still have the cash in my checking account to pay other bills. If I don't have a CC and my checking account is empty I am going to have issues paying rent etc.

PS: Think of a CC as a financial firewall. You still need the cash to pay your bills, but keeping a redundant CC with an unused 15k credit limit is cheap.

That makes more sense.

Personally, I don't auto-pay everything. Stuff like sales tax, utilities (power, gas, water, cable), insurance, parking, car payments that isn't variable.

The facts are simple: Consumers have more protection on a credit card than a debit card. The Visa/MC logo on your debit card gives a false sense of consumer security.

Here's an example. Buy a laptop from ebay. Pay with debit card. Seller ships a brick in a laptop box sends via Fedex. You sign for the package, open the box, realize it's a brick. You dispute the charge with your bank. They are nice so they provisionally give you a credit. They call the sender. Sender says "I have a tracking number, he signed for it, he's lying, I sent him a working computer." You lose this dispute. The bank tells you to sue him in small claims court.

With a credit card, as long as you dispute before you pay the bill, the dude doesn't get paid, and you don't get charged. Once you pay, your rights are diminished.

> B) Don't live check to check. Keep track of your own finances.

I'm not saying this to be aggressive, but you're missing something in the calculation. http://www.investopedia.com/articles/03/082703.asp

You should be more aggressive, because I don't understand the point that you're trying to make.

He's saying that you could make $7 by investing your cash for 30days before paying the charge card.

You could lose a lot more than $7 by being a day late, and labor in maintaining a credit card has to be worth more than $7 a month.

Labor? My credit card auto-pays in full each month. For that I get use of someone else's money, points and cash back, and additional warranties. It is no extra work for me, and actually has less stress because if a bad charge does come through the money will never leave my account.

If you use a debit card now and are use to paying in full you are leaving literally hundreds, if not thousands of dollars per year on the table in free money by not using a credit card.

Ceteris paribus, the time value of money is a valid consideration. Not sure you read through the entire link and thought about how it applies to both sides of a lending transaction. You may have reasons to disregard it personally, but in an equal comparison being able to spend $X and paying $X Y days from now is strictly preferable to paying $X today.

It's essentially the bedrock of the modern financial system.

> A) Opt out of "overage fees and bounced-check insurance" which would be the problem here, not debit cards. Keep track of your own finances.

How would that work? With banks in the UK, you can either say (1) let the charge through, in which case they will charge you "unapproved overdraft fee" or something, or (2) reject the charges, in which case they will charge you "unpaid transaction fee" and not pay the bill (which I think is a crime, because they're literally charging you for nothing - as they didn't deliver the service (pay the charge)), in addition the company that issued the request will charge you a fee as well.

I can only hope that elsewhere, regulations are a bit more sensible so that there is no potential for this kind of abuse.

You make sure that you have enough money in the bank to cover what you spend.

One problem: Debit cards are automatically paid down at zero all the time. None of the credit cards I've ever had have made it easy to automatically pay down to zero. You have to do it manually - you remember most of the time, then you're a bit late one month, and it's enraging. Credit card companies have every reason to make this difficult.

I've had credit cards since 2005, and at least 15 different ones, and they've all had an option to autopay online so that you don't even need to remember to pay your bill. I highly doubt any major bank issued card does not have an auto pay full balance option.

Card issues make crazy amounts just in the transaction fees merchants pay, they have no reason to dis incentivize people from using them for as many purchases as possible.

> None of the credit cards I've ever had have made it easy to automatically pay down to zero. You have to do it manually

My bank's electronic bill pay automatically pays my full credit card bill, every month, without fail. It's been doing that for at least a decade IIRC. Is this that unusual?