debit or credit?
(I posted a shorter version of this as a response to Wednesday’s post on Get Rich Slowly’s blog)
I’ve recently considered actually using my credit cards instead of my debit card for stuff like gas and groceries - things I know I’ll need and that I have already budgeted the money for. But I’m kind of lazy and it seems like an extra step - I would pay with the credit card, just to wind up having to make another payment from my online bill pay to the credit card company before the grace period ends… when if I just use the debit card, it’s all done in one step. I’d pretty much stopped using my credit cards because I needed to get my debt under control, and my debit card is really convenient, so the question arises - why would I even need my credit cards once they’re paid off if I have an emergency fund? I’ve learned how to live without needing them to get stuff. So what purpose can they serve for me now?
The benefit I see is that it would keep my credit active and good. I’ve read that after a while, stagnant credit cards don’t get reported - I don’t know if this is propaganda designed to get us to use our cards even if we don’t want to or not, but I know that if I use my cards properly by paying them off on time before interest accrues, it shouldn’t matter. Plus, two of my cards have a cash back feature that I can’t take advantage of without actually making purchases. So I think I will start to use them, if I can break the habit of just paying for stuff outright with the debit card, since I actually have the discipline to do it responsibly.
If I thought there was a chance that I’d mess this up, I wouldn’t even consider it, though. I’ve come too far to regress now. It would be kind of fun, though, ‘cause my credit card companies will hate me! I’ll be using the cards, which they want, but I’ll pay them before they can charge me for their use, which they don’t want. On top of that, they’ll have to pay me for doing it because of the cash back features of my cards - essentially, I’ll be making money off of them instead of the other way around!
One more thing - once I needed my Zun.e media player replaced but I had lost the receipt. Since I bought it with my AM.EX, they went to bat for me and I was able to take advantage of the warranty and get a replacement. I don’t know if I could’ve done that with my debit card, but I’m sure glad AM.EX was there for me. I’ve read that if you use your Vis.a debit card as a credit card (say "credit" when they ask "debit or credit"), you can get this kind of protection. But using my debit card doesn’t boost my credit score. Faithful credit card repayment can. Also, the way the money clears your checking account is different if you do debit instead of credit. Credit clears your account slower than debit. I hate slow-clearing items so much that I’m considering using money orders instead of my occasional checks.
If you want to know more about the benefits and drawbacks, check out this article.
Anyway, I have three cards. I can use one for gas, another for groceries, and the other for the allowance I budget myself every month for eating out or other incidentals.
