No, you are saving money, because while the merchant raises the price to account for it, everyone gets the higher price regardless how you pay. At least with a card you can get some of it back.
(With rare exceptions, some vendors do give a cash discount. In which case I always pay cash.)
Where's the incentive to minimize fraud though...
- They and similar businesses (e.g. Stripe) offer automated tools to deal with fraud… for a price.
Outcome: the incentive to minimize fraud, which is often a result of crap security from the payment network, is on merchants, who also get charged extra protection money to get payment networks to do stuff they ought to be doing in the first place.
It's probably different when you're at a much larger scale than I am, but even Wal-Mart (who I was employed by in my late teens) has all sorts of cash-handling procedures to mitigate the risk of money just walking away. Even a their scale, they spend 1% on CC processing, but by the time they added up all of the labor and expenses of cash handling,it might be comparable. And for a small business it's likely more.
And then there's the data collection which has value too.
People act like accepting cash is free, it is not.
Realistically, the price difference is probably not worth the hassle of needing two prices and card sales are probably affordable enough and common enough to not bother.
https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pd...
They basically said a surcharge for credit is effectively the same thing as a discount for cash, and because of freedom of speech, merchants are free to communicate the difference to their customers either way.
Low end cards aren’t expensive because they are subsidizing high-end cards; they are expensive because they need to cover the collection costs
Some merchants offer cash discounts (or a credit card surcharge), and you can make use of that if you want to. Ultimately I use cards for the convenience, regardless.
I find it pretty damn rational to deliberately remove CONSUME MOAR incentives like points/miles/cash-back rewards from my life.
CC acceptance decreases "friction." Some part of it is unlinking paying with the feeling of depleting resources when you pull cash out of your purse or wallet. Maybe running low on $20 bills and having to go to an ATM makes you decide to put one item back on the shelf. Or one's bank account is nearing bottom. In younger generations the opposite ironically can happen. They feel digital numbers fully but cash is spent more freely.
Actually, I think points are more like a savings account than a consumption reward, since the best deals are on international flights you have to save up a lot of points for…
Can you explain why is it rational to willingly pay more for things when you could pay less?
I also wish we didn't have to play these games, but we don't get that choice. But we do have a choice to pay less (with a credit card) or pay more, so take the rational choice.
One can capture most of the upside, with little thought, by using a cashback card across the board.
Can you expand on how is this happening?
> The credit card system is ludicrous.
We can call it ludicrous, I'm not going to disagree with you!
But what are you doing about it?
Being what it is right now, you can either pay and get nothing back, or pay the same and get something back.
In the absence of me having any influence to change the system, I'll choose to get some money back.
but like the other poster, I've had people try to charge me for things that weren't mine and I've never had the problems people seem to imagine exist with debit cards.
At this point I've concluded it's a marketing scheme by the CC companies that has convinced large swathes of society that debit cards are dangerous.
Not only that, but I would argue the false sense of security of CC's makes it so people are less safe in their habits.
That's been my experience as well. Although my bank almost always declines debit card transactions if I'm more than 50 or so miles from home, making the use of credit cards much more useful when I travel.
With a credit card, the money never leaves your account in the first place, at least until the bill is due.
Regardless, I know I'm legally protected with any credit card I use. With a debit card, it depends on the bank's fine print as to how disputes are handled.
> The money is not in your account until the dispute process finishes.
That's not necessarily always the case.
I use a debit card for almost everything. I've been doing it this way for quite a long time now.
Both times I've filed a dispute over debit card transactions, my bank immediately put the disputed amount back into my account while they investigated the dispute.
It was inconvenient to deal with (as many things in life can be), but it was not particularly problematic.
Your bank is nice, but relying on a corporation like a bank to be nice is risky and a fragile stance (they can change ToS any instant).
With credit cards, the protections are written into law (regulation) so you don't need to hope they're nice to you, it's actually guaranteed.
Banks are a lot more tightly regulated that most other businesses, and (in my experience) don't generally have "we can change the ToS whenever we want, however we want" clauses in their customer agreements.
All the banks I've dealt with say they have to give you 30 days notice of any ToS changes, and with language like "if we reasonably consider that the change is favorable to you" (or similar).
If your bank has more leeway in changing its ToS on you, I would suggest having a look around at the terms other banks offer.
I've yet to see a bank's customer agreement wherein the contractually-defined protections for debit cards varied significantly from the legally-defined protections for credit cards. (I haven't made an exhaustive study of this, but I have read the fine print for every new bank account that I've considered.)
If you can find a customer agreement that is meaningfully different in this aspect, then: I'm all ears.
Right, but they can change those unilaterally whenever they feel like it. Multiple times a year I'll get an updated terms of service document from this or that bank.
Or maybe you're just spilling FUD?
Just because a thing can change, doesn't mean that it will. (It doesn't even mean that it has ever changed.)
> banks typically offer stronger
That's irrelevant since banks can change their ToS.
But if you have a link to the federal law/regulation please share.
lets see what ftc.gov has to say about it
https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-my-mon...
oh what's that, there are federal protections surrounding debit cards?
imagine going into this conversation actually knowing what you're talking about.
/inb4 "I did some quick googling, let me explain how I'm going to try and change my argument to save face"
https://news.ycombinator.com/newsguidelines.html
However, I appreciate the CFPB link. Having worked in fintech I'm familiar with them.
The link does corroborate that debit card protections are weaker than credit card protections. They have with more aggressive reporting requirements (2 days) and higher potential liability ($500, or even as much as the full amount in some circumstances, though unlikely).
This document has a handy table that compares the protections side by side. As you can see, debit card protections are weaker. Scroll down to the table "Federal Protections for Unauthorized Transactions":
https://www.experian.com/blogs/ask-experian/are-credit-cards...
between 2 days and 60. read it closer.
this is called backpedaling, as I predicted. we've now gone from "prove debit cards have federal protections!" to "but but but ... they're different!".
they're protected mr fintech family who had no idea.
I know this wasn't the point of your story, but refusing to refund the transaction takes it firmly from "honest mistake" into "fraud" territory in my book. Oops, I accidentally stole your money, my bad. No, I won't give it back. WTF?
As such, debit cards are still very popular for people who need to control every dollar, which is a lot more people than you think. Often folk would rather a transaction be denied than to go into expensive debt - they've been burned, they've learned the hard way.
I see a lot of people using pre-paid credit cards. You can just roll into Walgreen's, flop cash on the counter, and "charge up" your card.
Those pre paid credit cards come with their own substantial fees, and usually are without rewards or purchase protections.
I’m not entirely sure what you’re getting at?
Having looked over a few the fees aren't any different than what you'd expect at a commercial bank like Wells Fargo. Many do come with rewards, often tied to the network of stores that issues them. Purchase protections aren't universal on standard cards.
> I’m not entirely sure what you’re getting at?
That debit cards aren't inherently safer than credit cards and this is reflected in the scope of available products.
But you're absolutely correct, people act as if CC's don't have the inherent risk of going into debt, not as bad but similar to a pay-day loan. People throw around the word privilege, but it applies here.
Agreed.
> debit cards are still very popular for people who need to control every dollar,
But that's terrible advice. Debit cards will debit immediately from your account and you may know that banks are very creative in re-ordering transactions to inflict you maximum pain.
You have $1000 balance and on the same day issue payments for $10, $20, $30, $40, $50 and $999. If the bank processes those in the same order you get hit with one overdraft fee when the final $999 payment goes through.
But no, the bank will rearrange that to process $999 first, and hit you with five overdraft fees. So nice of them. I mean nice for them.
With a credit card the payments are buffered away from your balance and you can choose when to pay it.
>You have $1000 balance and on the same day issue payments for $10, $20, $30, $40, $50 and $999. If the bank processes those in the same order you get hit with one overdraft fee when the final $999 payment goes through.
>But no, the bank will rearrange that to process $999 first, and hit you with five overdraft fees. So nice of them. I mean nice for them.
According to[0/PDF] the Consumer Financial Protection Bureau (CFPB)[1], reordering transactions in that way is illegal.
[0] https://files.consumerfinance.gov/f/documents/cfpb_unanticip...
[1] N.B.: The CFPB is a US Government agency.
Edit: I'd clarify that I am not claiming that this sort of transaction doesn't happen, but rather that it's not a new issue and happens often enough that the CFPB felt it important enough to publicly opine about its illegality several years ago.
Additional Edit: Added more context from parent comment to make their point (to which I certainly wasn't in disagreement) clearer. Apologies for any confusion.
In the US that's been illegal since the late 90's, you need to update your information.
And yet, it happens.
https://www.cbsnews.com/news/nearly-half-of-banks-still-reor...