(Note: There's a chart at the link that I can't post but that is kind of interesting)
Cash or credit? Most people use cash for small purchases
By Priya Anand Published: Aug 27, 2014 6:39 p.m. ET
213 38 26 318 Millennials, you’re paying for things the wrong way Getty Images If you’re going to pay with plastic, use credit, not debit. About two-thirds of credit card holders use cash for purchases under $5, according to a survey released Wednesday by CreditCards.com, which comes at a time when swiping cards comes with greater security risks and retailers and companies grapple with data breaches.
“There certainly are some safety benefits to using cash because you don’t worry about someone running your cash through the skimmer,” says Matt Schulz, senior industry analyst at CreditCards.com, referring to a device commonly used in credit-card scams.
About half of 18-to-29-year-olds surveyed prefer to pay with plastic. But they’re doing it wrong, at least by some measures. Overall, those who opt for plastic choose debit cards twice as often (22%) than they choose credit cards (11%). Millennials prefer debit over credit by a ratio of nearly 3 to 1, according to the survey, even though debit cards offer fewer protections and rewards and don’t help young people build credit.
Psychology may be a factor in the decision, Schulz says, given that people may be trying to limit spending to the money they have by using a debit card, which pulls money directly from a checking account. But if a fraudster gets a hold of a debit card, the account holder could be liable for unauthorized charges of $500 or more. Credit card holders are only responsible for up to $50, and can report a bogus purchase as fraud.
“If your debit card information gets stolen, somebody can take real money out of your account that you won’t be able to use to make a car payment or a doctor’s bill,” Schulz says. “That money may be gone for a week or two.”
Unsurprisingly, there’s a generational gap when it comes to deciding between cash and plastic: 77% of people age 50 and older typically buy small items using cash. Eight out of 10 cardholders of all ages in rural areas also preferred cash, compared to 62% of urban and suburbanites, according to the survey of 983 major credit cardholders from July 17 to 27.
You know how everyone here always says that financial basics like budgeting should be a part of everyone's basic education? I think that knowledge of the risks and benefits of credit and debit cards should be included in that.
I'm 29 and I only use my debit card to get cash from an ATM. I have never used it for a consumer purchase - why would I when the protections are so much greater on my credit cards? I only pay with cash when I have to (tolls, cash-only parking lots) because I rarely carry much cash with me.
I rarely carry cash and always charge everything. I actually did have my debit card information stolen a few years ago and ever since then I always use my credit card for everything. They're just too risky for me.
I was behind someone in the express lane at the grocery store and they paid with check. I was all wtf over that.
I have only ever used my debit card as an ATM card. I use cash only when I need to. I love credit card protections and rewards.
I do have several friends in their early 30s who use debit cards only because they're afraid of going into credit card debt (again -- they were in debt as students). I'm shocked by it, as they're smart and have plenty of money (biglawyers). I'd think that in the 10 years since graduation they could learn how to use credit responsibly.
I gave my 37 year old friend (who uses credit cards) a lecture about his 27 year old boyfriend the other day. Boyfriend doesn't have a credit card. Never has had one. This came up because my friend mentioned that he gave his boyfriend 700 euros for BF's trip to Europe. This was done because my friend gets a better exchange rate than his boyfriend does. That was crazy because (1) getting Euros ahead of time is a waste of money -- get them at an ATM in Europe! And (2) carrying around 700 euros seems risky? Then boyfriend missed his flight home and needed to rebook, which can be a fiasco when you don't have a credit card. And he isn't establishing any credit history, which is bound to bite him in the ass at some point. I understand that boyfriend doesn't have much money and is scared of not using cards responsibly, but I think that's a bad excuse. Good credit is important, and a smart, well-educated grown-up should be able to figure it out? Maybe that's flameworthy.
Post by illgetthere on Aug 28, 2014 10:46:55 GMT -5
A lot of gas stations and smaller places won't allow cards for purchases under $5 because of the fees the incur. I don't know that the chart is really representative of what people would do vs what they have to do.
Edit: H uses debit for everything; I use credit. We only have one CC and it is in my name. All household spending and larger purchases go on the CC.
This is fascinating to me because I was at lunch a few months ago with a business contact and she was complaining that her son (early 20s) and all his friends are completely against credit cards. They don't even want to take on mortgages for houses.
Maybe it is a backlash against the high student loans and high credit card debt levels racked up by the previous generations.
Post by sometimesrunner on Aug 28, 2014 11:02:10 GMT -5
I use credit cards for everything possible. I think I have $6 in my wallet and that's been in there awhile.
Last night we were at Lost in Fun, which is a play place for kids, and M thought the ATM machine was a toy. He started pushing buttons and "Mommy need cre-card." I'm guessing he's going to be in a "plastic" generation as well.
I cannot remember the last time that I carried cash. I charge everything.
My grandmother only uses cash/checks, unless booking a plane ticket. She does zero online shopping and is afraid of debt/credit card scams.
We are a mixed bag of cash, credit, and debit cards.
But replace "grandmother" with "MIL" and that's my family. And she never books plane tickets. She will go to the train station before a trip to see us and write them a check.
I don't think debit or credit holders are liable for a dime. Though with a debit there may be issues with overdraft fees/late fees
I use a debit because I want to not overspend.
I believe that legally, cardholders can be liable. Many cards offer zero liability as a perk.
I just looked it it up--you are right. For practical purposes almost no one should be paying since all Visa, MasterCard, Discover and Amex look to be $0. So, that's pretty much everyone:)
My MIL not only uses checks, but her and my FIL don't use debit cards or ATM machines. They pay cash or American Express. She was a bookkeeper for many years and keeps a household budget to the penny in a paper notebook and uses a 10 key calculator with the little roll of paper. Old school is an understatement.
I like to keep a little cash on hand. It makes it so much easier to sneak little purchases (a latte, a new nail polish) from my DH!
My MIL not only uses checks, but her and my FIL don't use debit cards or ATM machines. They pay cash or American Express. She was a bookkeeper for many years and keeps a household budget to the penny in a paper notebook and uses a 10 key calculator with the little roll of paper. Old school is an understatement.
I like to keep a little cash on hand. It makes it so much easier to sneak little purchases (a latte, a new nail polish) for my DH!
OMG!
Actually my MIL was paying by check a few years ago while Christmas shopping (holding up ALL the lines). I was like WHAAAAT? But I was pleasantly surprised this last weekend to see her using a CC.
I'm also a mixed bag. I use credit for most things. Cash for things under $20. I'll use checks for things that I want more of a record - usually doctor's offices/labs/hospitals - because I've had circumstances where money was not credited to my account properly and it was nice to be able to send them a copy of the canceled check.
I do NOT use my debit card for purchases, only taking money out of an ATM.
My MIL not only uses checks, but her and my FIL don't use debit cards or ATM machines. They pay cash or American Express. She was a bookkeeper for many years and keeps a household budget to the penny in a paper notebook and uses a 10 key calculator with the little roll of paper. Old school is an understatement.
I like to keep a little cash on hand. It makes it so much easier to sneak little purchases (a latte, a new nail polish) for my DH!
OMG!
Actually my MIL was paying by check a few years ago while Christmas shopping (holding up ALL the lines). I was like WHAAAAT? But I was pleasantly surprised this last weekend to see her using a CC.
The lady is uber organized. We were at her house at Christmas and were discussing new gaming systems with our nephews. She says wait a minute and goes to her filing cabinet and returns with the original receipt from 1986 for DH's first Nintendo. Bam.
Lurking, I rarely have cash on me. My mother made a comment a few weeks ago his she didn't understand how I could travel and not have cash. I use my debit card and if I don't have enough in the account, I wait until I do. We have credit cards but don't use them unless it is an emergency.
Post by imojoebunny on Aug 28, 2014 12:37:46 GMT -5
Interesting. I don't even have a Debit card. I got rid of it 20 years ago when someone stole just the number, and cleaned out my checking account.
I charge everything for the most part. I only pay cash at one store that is owned by a friend of my son's, and I know that the $5 and under charges kill their profits.
We use CCs for everything - for the rewards, protection, and for tracking. I rarely carry cash, and I definitely do not carry a checkbook. When I do have cash, it disappears much more quickly, and I'm usually not really sure where it all goes.
I was at Costco recently, and the person in front of me was paying by check. I'm always a little annoyed by check-payers when there's a long line, but for some reason, it was especially surprising to see a check-payer at Costco. Like, I assume all Costco shoppers are a little more hip than that, or something. LOL.
I was at Costco recently, and the person in front of me was paying by check. I'm always a little annoyed by check-payers when there's a long line, but for some reason, it was especially surprising to see a check-payer at Costco. Like, I assume all Costco shoppers are a little more hip than that, or something. LOL.
Guilty. However, I was buying my SO's Christmas present and the choice was to either put it on the Costco AmEx (which is in his name) or a check. I didn't have $400 in cash on me.
Team CC for everything possible. I use my debit card when I'm getting money out of the ATM for things like paying a babysitter.
Those free flights come from somewhere. .
Agreed.
Plus I have friends and colleagues whose debit cards were compromised and people stole real money from their bank accounts. Of course, they reported it as fraud and eventually got their money back, but it caused them to scramble when the theft happened and then they had scheduled payments to their mortgage bounce.
That is why I never use my debit card for anything other than cash at an ATM.
I'm jealous of those of you who never need cash. I feel like I have to go to the ATM at least once a week because (a) housekeeper is coming that week, (b) going to a cash only restaurant, and/or (c) going out with friends and don't want to annoy waiters/bartenders by trying to split the tab on a bunch of credit cards (some restaurants are fine with this, some are not, and at bars it is difficult anyway).
It would be a lot easier if I didn't like so many restaurants that don't take credit cards. But so many yummy MM places here don't!
Post by sunnysally on Aug 28, 2014 15:53:22 GMT -5
For those of you who only use debit cards to get cash from an ATM, why not just have a cash card?
I've finally convinced DH to put everything on credit cards. It helped that he could see a tally of how much cash back we were getting. He takes cash out every week for his "allowance" but I hardly ever have cash unless it is for a specific use.