[sagsal]

We pay off our CC every month but I find that every month I am constantly worried about what the final bill will be (I share with my wife) and forced to make a lump sum payment.

Would it make more sense to just use a debit for all purchases since it tracks almost real time in our online account and have a CC for emergencies/travel etc - wouldn't this help us manage our money better?

Not sure if there is an answer but thought I would throw it out there

Thanks

 

[lb71]

Probably. The benefit of credit cards is that for most of them you can collect some kind of points, you don't actually have to pay for the item unit weeks later, and there is insurance coverage on some items. If you are having a cash flow problem, then perhaps going the debit would force you to better manage your money. However, it seems you have a spending problem if you are concerned that you can't pay your credit card bill each month. So maybe you and your wife should develop some kind of budget to deal with this.

Even with a credit card, it's not that difficult to track your spending. Just record each purchase in a spreadsheet or something, and aggregate your purchases. You'll be able to tell when your are approaching your limits.

 

[stephenheath]

The two reasons I use a credit card for almost everything are the rewards (2% or 1% cash back depending on if they take Amex or not), and the security risk, especially with all the skimmers out there. Twice in the past two years I have had my debit card frozen because the cops had busted skimmers and my number was listed (I was never out any money), and I almost never use it. Don't forget that if they get your credit card number, you're only out $50, but if they get your PIN # you could be out a lot more, and if they drain money that was earmarked for your mortgage payment/car payment you could be doing a lot of explaining!

As for building up a big lump sum, I'm assuming you're not tracking your spending with Quicken or Money, but you could just pay off the balance each week so it doesn't grow big... just log in, check the balance on your credit card, and pay that amount. That way you don't have a big surprise at the end of the month.

 

[kayo]

I use my credit card primarily because of the rewards, but I also find it easier to track my spending. Everything is listed on my bill clearly. However, I don't wait until the end of the month for the whole bill, I log into my bank account and check my balance once in a while to keep track, so there really isn't any surprises for me at the end of the month.

Quicken and Money are good tools, but I use my own spreadsheet since I only need to log numbers, and I can quickly compare them against previous years as well, so I find that sufficient already. Perhaps that could be a place to start for you to keep track of your spending.

 

[frdsmth9]

Cash is king.

Bank did offer me a CC but I refused instead I just use my debit card to withdraw cash.

 

[Alexandra]

I prefer to use a credit card becuase of the rewards I get...I am not sure if there is an equivalent rewards system for debit cards - maybe P C Banking? Credit cards help you to build...credit! So they are good things to have as long as you pay them off each month.

Maybe it would make sense for you and your wife to have your own credit cards instead of the one shared one. Sit down with her and work out a budget so you know how much you can spend on credit as individuals, and then don't ever go over that limit.

I can see how when you share a credit card, you would have a harder time tracking it, because you never know exactly what your partner is putting on the card.

 

[Naumko]

I go with credit cards as well for the same reason mentioned before: the rewards and basically a 3-4 week interest-free loan provided you pay the entire balance off by the due date.

Rather than being surprised by the bill when it comes in, I log into the credit card website on a regular basis to see as my purchases show up (I also update MS Money with the transactions).

Perhaps you get a card with rewards that is meant just for everyday expenses and call the bank to keep the credit limit low, close to what you plan to spend each month. You may get hung up at a store if you hit your limit, but you at least won't go over.

 

[brad]

Having gone deep into credit card debt at one point in my life (debt free for eight years now), I am pretty careful about my credit card purchases. Basically I set a limit for myself each month, which is the amount I know I can pay off when the bill comes in, and I treat it like a debit card. If you track your purchases then it's not much different than a debit card: just always know how much you've charged and how much you have left before you hit your monthly self-imposed limited.

Personally I use a debit card for most of my purchases and use the credit card only for online purchases and big-ticket items (travel, appliances, etc.). I suppose I could get more cash back with the 1% rewards if I used my credit card more, but at the interest rates the banks charge I'd probably wipe out my 1% rewards for an entire year if I ever couldn't pay my credit card bill in full. And I think that's what the banks are counting on...sooner or later you're going to hit a cash flow crunch and not be able to pay your entire bill.

 

[mogul777]

You can track your credit card expenses easily as well so really this is a non-issue. However, since you are more comfortable using a debit card then sure go ahead and do so. The rewards stuff is rumoured to be scaled back to make up for the other imposed cuts to the companies windfalls.

 

[CuriousReader]

I pretty much put all my expenses to credit card - debit card is only being used for cash withdrawals at ATMs.

My reason is that I get extra benefits (points, cashback, etc rewards) by using credit card - some debit have benefits too, but CC benefits usually higher.

I have no problem charging everything to credit card because I am good at controlling my spending (I never spend on anything I dont need, I always carefully think about what I spend), so I have no problem or surprises at the end of the month in paying the bill

 

[CanadianCapitalist]

Don't forget that if they get your credit card number, you're only out $50, but if they get your PIN # you could be out a lot more, and if they drain money that was earmarked for your mortgage payment/car payment you could be doing a lot of explaining!

I believe you meant debit card number. Security is becoming a huge issue. I've had my credit card compromised twice so far and both times the fraud charges were completely reversed.

 

[CuriousReader]

I believe you meant debit card number. Security is becoming a huge issue. I've had my credit card compromised twice so far and both times the fraud charges were completely reversed.

Agree with the fraud / other risks related to credit card, but from my experience, Visa has been great with dealing with the stuff, they even call me when I suddenly make a totally-out-of-pattern purchase, they called within 2-3 days of the purchase to verify it.

My girlfriend also had experience with fraud when her card was charged some purchase that clearly she didnt do, Visa reverted the payment within 1-2 weeks.

 

[stephenheath]

I believe you meant debit card number. Security is becoming a huge issue. I've had my credit card compromised twice so far and both times the fraud charges were completely reversed.

I guess I meant both debit card number and pin number... the point being that it isn't an automatic reversal if they get into you checking account like it is with fraudulent credit card usage, and even if the bank reverses it in a few days, during that time if you had a mortgage payment or car loan come due it could cause you additional problems.

 

[Spidey]

Excellent point about the security. I've had my card compromised as well, and it was cleared up very satisfactorily. Additionally, credit cards will usually allow you to do a "charge back" if there is a disagreement with a vendor.

For these reasons, and for the points, I use my credit cards everywhere that they are accepted, even for a very small charge. The points add up and I've received a lot of money back (its like free money). I have a debit card but only use it when credit cards are not accepted.

The one thing to keep in mind is that it is imperative to pay the balance in full each month if you don't want to sabotage your financial future to debt.

 

[webworm98]

I am from the U.S. I know in the U.S. we can lower are daily authorization limit for are debit card. I didnt know if you can do the same thing in Canada if you decide to use interac cards.

Partly offtopic

You don't have protection for your interac cards in Canada?

One other thing. I heard some banks will be issuing Visa and Mastercard debit cards in Canada. Dont know if they have. Just what I have read.

 

[Bullseye]

Many of the points addressed here, but I did an article on why credit cards are better than debit a while back with some other benefits;

Debit bad, credit card good

 

[webworm98]

Many of the points addressed here, but I did an article on why credit cards are better than debit a while back with some other benefits;

Debit bad, credit card good

Only if your disciplined enough. Some card companies my reduce grace period or have no grace period. Some may even charge annual fee.

Canada has the highest debit(Interac) card use compared to all other countries.

Myself, if your bank allows your to lower your daily authorization limit for your interac card, I would do that but don't lower to much or you couldn't use it on weekends.

 

[Bullseye]

Only if your disciplined enough. Some card companies my reduce grace period or have no grace period. Some may even charge annual fee.

Canada has the highest debit(Interac) card use compared to all other countries.

Myself, if your bank allows your to lower your daily authorization limit for your interac card, I would do that but don't lower to much or you couldn't use it on weekends.

Yes, discipline to spend within budget is a key point, I mentioned that, I think.

If you don't have that, I'd recommend people use cash over debit, for the security and costs reasons. Possibly even money jars.

 

[webworm98]

Do you really have more fraud with Interac pin card in Canada vs US debit card with pin? How come?

Pardon the long post.

In case you didn't know here are the type of U.S. Debit cards

1. U.S. has restricted atm cards. This only works at your banks atm
2. U.S. has an atm cards that will work at just atms (However, this card is becoming obsolete)
3. U.S. has an atm cards that will work at atms and merchants.
4. U.S. has debit cards that will work at atms and merchants and has a MasterCard or Visa logo


Number 1,2,3 can be assigned to either a checking or savings account.
Number 3 can be assigned to an unlimited checking account.
Number 4 is usually assigned to an unlimited checking account.

Numbers 1,2, and 3 can be only used as a pin transaction.
Number 4 can work as a pin or signature transaction either method will come of your checking account.

Current accounts are called checking accounts in the states.

Even through some U.S. banks don't follow the rule. U.S. debit cards do have protection

For debit card with 2 business days the loss is $50.00
2 to 60 business days the loss is $500.00
60 or more business days all the money plus any overdraft.

Both MasterCard and Visa has extended there zero liability to their debit cards. If you need to claim this. You will need to request a special form from your bank. This does not apply to pin transactions. (However, I think visa interlink may be covered under this but you would have to prove it went through this network).

Regulation E requires banks to give provisional credit within 10 business day of a written dispute. They have 45 days (90 days international) to investigate

Technically it is the 11th business day (even if the bank credits you on the 10th business day, you won't be able to use tell the 11th business day.)

Another rule that is sometimes overlooked is this

for unauthorized transfers involving only your debit card number (not the loss of the card), you are liable only for transfers that occur after 60 days following the mailing of your bank statement containing the unauthorized use and before you report the loss. This info was obtained from

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre04.shtm

For that rule above it does not matter if your card was used as a pin or a signature transaction.

U.S. Debit cards do work on the Canada credit card system or on the Maestro system if correctly activated by their issuing bank. Either method comes out of their checking account.

One odd thing about U.S. debit cards if the Canadian merchant takes both Interac card and credit cards. U.S. debit card coding makes it appear like it an Interac card, when it is not. It really confuse the Interac system. This is according to what I have read.

If you are a Merchant look for the word checkcard, debitcard, debit or just the word debit in the hologram in addition to Visa and/or Mastercard logo. Then run the card as a Credit or as a Maestro.

 

[OhGreatGuru]

Theoretically a debit card should be better for budget control, because you shouldn't be able to spend more thtn you have in the bank. But US banks are allowing small overdrafts on debit cards, and collecting billions annually on overdraft fees for this. I haven't been able to find out if CDN banks are doing the same, or making money instead by selling you "overdraft protection" to protect against extortionate penalties.
The problem I observe with debit cards is that people use them indiscriminately for every little purchase, and don't really "budget" their money. They just spend until it runs out. Taking out cash as a spending allowance is a more effective practice for managing your money.