I know this might just reflect financial culture differences across countries, but let’s give it a try
Edit: as a clarification, I meant credit card compared to debit, not to cash
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I live in the US. I use a credit card for all my purchases because not only does it shift liability from my money to the bank’s money, it also pays me a % in the form of cash back and I pay it off in full every month to avoid any interest charges. It’s extremely important that my credit card balance is never higher than my checking and savings combined to ensure I really can pay it off in full.
This is exactly my use case. Get free rewards but treat it like a debit card. Don’t spend more than you couldn’t pay back by the end of the month and you get free perks like cash back or airline points for travel.
I use a credit card for all my purchases because not only does it shift liability from my money to the bank’s money
Yes! My bank gives me 30 days to identify and contact them about fraudulent charges on the credit card, but only 3 for the debit card. Therefore I don’t use my debit card unless I absolutely have to.
A few years ago my local gas station was victim of a skimmer - thank goodness I had the 30 days, because it took them two weeks to realize what happened and contact everyone! I don’t check my bank every day for fraud so I would’ve had to eat those losses if it was a debit card.
Interesting, thanks
US here. Yes, I use it for everything that I can because:
- rewards
- better fraud protection
- features, like no foreign transaction fees
- delayed payment, meaning my money can earn interest
- build credit
I haven’t used a debit card in years (though I have two), and I haven’t regularly used cash pretty much ever (though I carry some). I actually have like 10 credit cards, though I only regularly use 2.
If I had to pay extra to use credit, I would probably use it a lot less.
No foreign transaction fees? Could you expand on that?
Most cards charge a fee for any transactions outside your economic zone, e.g. the US and a Canada are separate economic zones, whereas much of the EU is one economic zone. Usually these fees are 3-5%, and sometimes there’s also a currency conversion fee, but usually just the foreign transaction fee.
I’m in the US, so if I travel to any other country, I’d have to pay that fee. It turns out that some online retailers also charge this fee, such as Fanatical, even if the price is listed in dollars. My wife likes to order things intentionally, so we’re careful about which card we use.
Most travel credit cards and some others have no or reduced foreign transaction fees, whereas most debit cards don’t (Schwab and Fidelity in the US offer no foreign transaction fee cards in the US). For example, the a Capital One Quicksilver offers 1.5% cash back and no foreign transaction fees, and my Fidelity Visa offers 2% cash back and a 1% foreign transaction fee.
We like to visit Canada and my wife’s home country, so we have some no foreign transaction fees hanging around that we bring on those trips. The rest of our cards all charge 3%.
Schwab’s Investor checking is a god send if you’re traveling to a country that deals largely in cash transactions.
The refund any and all transaction and conversion fees for ATM withdraws which can be egregious for visitors to some countries.
That way you don’t have to carry around gobs of cash your whole trip…
Fidelity largely does the same. So if you already have a Fidelity account, don’t bother making a Schwab account, just get their debit card (make sure it’s a Cash Management account though).
In the UK, as long as you are able to track your finances well enough to ensure you repay the balance in full each month (you can arrange for this to happen automatically), there’s no reason not to use a credit card.
You should especially use it for purchases over £100 as by law card issuers are jointly liable for problems with goods purchased, so if I have a warranty issue the retailer won’t help with I can go through section 75 with my bank
I have never purchased something on a credit card and had it on the balance long enough to pay interest though, the rates are insane.
Plus, some cards give you points. Which can later be used for things like upgrades on flights.
This is exactly what I use mine for, and I’m trying to convince my wife to do the same. We’ve had to buy some relatively expensive things for the house recently, so I’ve been using the credit card for the extra protection, while she’s been paying in cash / debit card.
Luckily, we haven’t had any major problems yet, but she doesn’t seem to understand that the extra protection is worth it.
Honestly I’ve found that women have a different relationship with cash. It feels safer, more secure, it’s tangible - I don’t think that translates to credit so well. Just my experience however.
If in the US, there is almost no downside to credit cards as long there’s no annual fee and you pay it off in full every month. Most credit cards have some kind of rewards like cashback, miles, discounts, etc., so you gain something from using them. Banks are also very strict with fraud (because it’s their money you’re spending), so they will most likely side with you if you file a claim for unauthorized purchases. If you used a debit card, it’s your money that gets stolen; and while the bank will try its best to recover it, they have less incentive to work for it compared to a credit card.
I used to limit myself to the card that didn’t have any annual fees. Practically all my purchases are made with a credit card (all paid back in full by the end of the month), so it turns out to be really worth it to take the card with the most advantages and highest cashback rates. They pay me back the yearly cost of the card many many times over.
The catch is, if the amount of transactions starts to drop below a certain threshold, it might not be worth it anymore.
Note that I am in Canada, not the US. Not sure if that makes any difference here.
I think US cards tend to have better rewards than Canadian ones, but echo on the fees thing. If a person is spending $1000/month on their card(which isn’t much once you put all your utilities/gas/grocery/etc. purchases together), and youre getting a 1% cash back/reward, that’s $120/year worth of rewards. So depending on your yearly spending, it can be worth paying that annual fee to get a card with better rewards.
I use a credit card because our laws in the USA protect credit-card purchases better than they do debit-card and other electronic purchases.
Although I use a credit card with revolving credit, I always pay the full balance each month. In this way, it acts as a debit card, but I get the benefits of a credit card. I have to remember to pay it on time, but I can set up autopay even for that.
My credit union (a kind of non-profit bank owned by its members) is the issuer of the card, and it gives a 2% cash award for credit-card usage.
I do this, too. Anyone with any sort of self control should do the same, unless they prefer cash.
Using a debit card is too risky.
I feel exactly the same way. The only case I would recommend a debit card is if it’s at a separate institution from your main savings. That way, you’d only lose up to whatever that account has.
I’ve seen too many stories of people losing their savings because of a compromised debit card.
I use a credit card for everything, especially large purchases that don’t charge an additional transaction fee to use the card. I also pay it off each month. I get 3-5% back when I use it. It would be quite stupid/lazy not to take free money, while also keeping my credit score at 847 (last I checked).
American here. Not only do I use credit cards for all of my purchases (and pay them off every month, so no debt builds up), but I am finding it increasingly hard to use cash on a daily basis, even when I want to. I used to prefer cash, especially on trips, as a way to control spending when needing to stick to a budget. But now so many places here have stopped taking cash altogether, or shuffle cash purchases off to a separate process which takes longer. I still carry cash, but find I rarely use it.
But all the different types of electronic payments now are confusing. I recall getting stuck at an airport once, and sitting near a place that had food for a few hours. They took cash, credit, and Google Pay, but not Apple Pay. I was amazed by the number of people who end up walking away when they realized that, and who didn’t have an alternate way to pay.
Use a credit card for every single purchase that will allow it. I have the Amazon prime rewards card, and we order our dog food and many household items from there at 5% cash back.
I acquire cash back and it goes towards the balance each month. I pay the balance in full each month, thereby reaping the rewards (free money) and never pay a cent in interest. Been doing this for years.
Another reason I do this is because I do not want my routing and account numbers online with any business.
One small breach of your bank account and your life savings can be gone. I’m not trusting any big business with that, not to mention the fraud protections other users have mentioned.
If you can exercise discipline it’s a no brainier.
Costco card here, but pretty much the same argument. Aside from the points/miles/cash back rewards, most also include some minor insurance/extended warranty/travel/etc. benefits. It’s kind of shitty because transaction fees just drive up costs for merchants, but from the user’s point of view the financially beneficial option is to use a credit card for ad many purchases as possible.
How are you liking that Costco card? We were considering switching to that actually.
I never did, because in Europe people don’t need to build a credit score, and it is usually advised to only use money you have.
Anecdotal evidence, but the only people I know that use them have a tendency to overspend.
Norwegian here.
People here with shitty economic sense overspend using them and end up in debt. People with good economic sense use them for most of their transactions to get cashback/other benefits like bonus flights, etc. Some credit issuers also negotiate good deals with shops where you get the reduced price if you pay with their card.
We also use them for better fraud protection (liability shifts to the bank) and we usually get travelers insurance from the card issuer if more than half the price of the trip is payed with their credit card.
Interesting. So among people you know, most of the people would use credit cards rather than debit?
In my circle yes. Mid 30s to mid 40s. Well educated.
Where in Europe, if you don’t mind me asking?
I’m in the UK, and we have to build a credit score if we want to get a mortgage, a loan, or any sort of finance, unless it’s from somewhere predatory like a payday lender.
Spain. Interesting, I didn’t know you had credit scores in the UK
Argentinian here, and same.
I just feel comfortable spending with the money that I have, and forgetting about it.
I’m in the US. I use my credit card for utility bills, groceries, gas, and whatever else I’m buying during the month. Anything like a mortgage or car payment I pay from my bank account. Every month I pay off the card so I don’t get interest charges.
American here, 99% of the time I use credit cards. It’s just generally easier than carrying cash and nearly all vendors accept it. Beyond that I get a % back as points to trade for gift cards or in my case plane tickets. Another item is that if I get robbed I can quickly recover or head off any lost money.
Do you guys not have debit cards?
Credit cards have better identity protection and handle disputes more favorably than a bank debit card here.
Yeah I get that just in the UK they’re much more commonly used than credit cards. The way the post I replied to was worded sounded like it was cash or credit and that’s it
We do, I have a couple. I don’t really use them though, you don’t get the points. I always make sure to pay my credit cards off each month so it’s worth the points for me.
I use credit cards for almost all purchases.
As long as you pay it off completely monthly, even modest perks make it an easy choice.
In France, most of people don’t even realised that credit cards shown in american TV productions aren’t like our (debit) cards.
But that’s totally normal when you see someone paying with a card to assume that they have indeed pay, rather than assuming that they have indebted themselves despite being able to afford the product.Totally! I always pay it off each month so there is no interest and I get tons of points.
They also give tons of other benefits, like accidental damage and theft protect on stuff for the first 30 days, double the manufacturers warranty, if I die over seas they will cover the cost to repatriate my body (I live in a foreign country)
There are tons of other things, too. Just don’t care to list them off. I do have to pay about $200/year to have the card, but I think it’s worth it due to the points back.
If you get a cash back/rewards card and pay in full every month, you get paid for shopping.
