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Debit Cards vs. Credit Cards: Does Usage Really Change?

Posted by Sean | Posted under Numbers | September 4, 2008

via FMF, Do We All Really Spend More With a Credit Card:

“Point #2: There’s no difference between a credit card and a debit card regarding convenience, so the “debit card is better than a credit card” debate is dead. For people who pay off their credit card every month (which is one of my requirements for carrying a card), there’s really no meaningful difference between a credit card and a debit card.”

via Detroit News, Debit Card Fees Are A Real Whopper:

Overdraft fees average $34, even though the average debit card purchase is $17. Most customers repay overdrafts in less than a week. According to the center, if that $17 overdraft were a loan (which many people argue it essentially is), a $34 fee over five days amounts to a loan at an annual interest rate of 14,600 percent.

I’ve never understood the argument that people spend less with cards than with credit. In both cases, people are using little pieces of plastic. In both cases, people can use them responsibly or irresponsibly. Yet the same person is magically transformed from a sinner with credit cards to a saint with debit cards? Is that really how it goes down in the real world? I’ve seen people go wild with fees on debit cards, more (or quicker) than they would have with credit cards. What am I missing?

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  1. Miranda September 4, 2008 12:03 pm

    I agree with you. As someone who was the victim of strange banking practices this weekend (long story; fees refunded) I was shocked to find 5 $38 fees on my account. That’s $190. With a debit card, and the way that banks process things, you can easily get into a position in which you start getting in way over your head with debit cards.