Why I Don't Use Debit Cards

Filed in archive Buying Stuff on July 17, 2007

A lot of people these days have ditched checks in favor of debit cards. Others have ditched their credit cards in favor of debit cards. While I understand this puts me in danger of sounding like an old fart, I won't be ditching anything in favor of debit cards. Let me tell you why.

First, I understand the attraction of debit cards. You don't need a checkbook, because a swipe of the debit card just takes the money straight from your account, meaning you don't have to write a check or do much of anything else. And, when you use a debit card versus a credit card, you are in essence using cash versus credit, meaning you won't spend moe than you can afford. Fair enough.

But there are problems with both these debit card advantages.

First, when you use your debit card, how do you keep track of how much money you actually have? If you're not writing it down in a checkbook, how are you keeping TABS on your money? And if you're doing any sort of recurring payment that comes straight off your card, how are you keeping track of those; how do you remember all the recurring payments in order to make sure you have the money to pay for them? And, most important, how do you get an overall sense of how you're spending?

If you have a checkbook, you're writing all these things down. If you're putting payments on a credit card, you're getting a monthly statement that shows all your charges. Do debit cards provide you any of these record-keeping must-haves? Or is it totally up to you to keep track? I've heard that you can keep track online with some banks, but if you use a debit card, are you going online to check your account and get a sense of where your money's going? Or are you being lazy and just making sure there's still something in your account?

I ask these questions not out of trying to challenge anyone, but out of ignorance of just how far debit cards may have come. My past experience with debit cards has always given me the feeling of a loss of control, that I'm no longer master of my money because I'm not keeping close track of where it's going. Has this changed, or are you still flying blind with debit cards?

Second, while I like the idea of debit cards over credit cards for making sure you don't overspend, I prefer to use credit cards for most sizable purchases because credit cards provide more protection. If you make a purchase with your credit card and whatever you bought breaks or doesn't show up, you can dispute the purchase with your card company and you generally won't have to pay. Also, if you lose your credit card, someone else might use it, but you'll not pay more than $50 on fraudulent charges.

Debit cards do not provide this same protection on purchases-because once you've paid, the money is already gone. It's come straight out of your account and will not be coming back. Even if your bank is willing to believe you were swindled on a purchase, it will be much hassle to get your money back. Also, if you lose your debit card and someone manages to gain access to your account, you could lose a lot of money very quickly, as this person has direct access to your whole account. Your bank will provide you with some protection in this case, but, again, the money is gone and you have the hassle and time of getting it back. Plus, if you have any automatic recurring payments against that account, one of them may come looking to get paid at a time your account is cleaned out but hasn't yet been restored.

That's why I don't use debit cards.

Do you use debit cards? If so, why? And what do you think of my arguments against them?