That has not been my experience with debit cards in the US at major banks, at all, over decades.
(I'm pathologically avoidant of credit cards, which I think are mostly pointless.)
(I'm pathologically avoidant of credit cards, which I think are mostly pointless.)
Under the law, credit card issuers actually have more time to deliberate before making you whole, not less.
It is nice that you know what the law is but that isn't the same as the law being followed. Also the bank was PNC, not the biggest guy ever but not a small player either.
In a sense it is though, because it lowers your available credit by the amount of the charge. And the fraudsters are going to try to run you right up to your credit limit, so you end up at the same problem: You now have legitimate charges being declined because the fraudsters locked up your payment card.
It's also not that hard to get two debit cards. There are credit unions with no minimum balance requirement.
The actual problem is that if it happens to any card, all the stuff configured to use that card is now failing. You have a toll tag and the company goes to charge your card for a road toll, it's a perverse unaccountable bureaucracy that has captured the government so enjoy your $50 declined payment fee. You have autopay on for several services which will naturally suspend your account if you don't pay them. That's an inconvenience for something like Netflix but for your various information services it can be a big problem even if all they do is turn it off temporarily, and an even bigger problem if the turning it off involves deleting your stuff. Likewise for things like insurance where a gap in coverage can cause you to get fined or negatively impact your future rates.
Some of that can be mitigated by chasing it all down and switching them before the charge comes, but the labor to do that is a significant cost in itself and plenty of people aren't going to recognize the need to do it until it's too late, or try to and still miss some.
But then you need to have money in the other checking account too.
Still, completely agree with your larger point. It's a big hassle having to switch cards, and the status quo (i.e., the industry being in a multi-decade transition period towards acceptable security) is sometimes the worst of both worlds:
Half of all merchants don't support automatic card updates and need to be manually fixed, while the other half do and have a chance of keeping your card alive in a fraudster's account where it's on file if your issuer is not careful.
No part of my life has been harder for not having revolving credit. I had a family, with two kids, starting in my very early 20s; I have lived on ramen wages several times since then; I've bought houses, rented cars, all that stuff. There's really been no point I can think of where I felt like having a revolving credit card would have made any of it more manageable.
I'd get points and stuff (I have a card now, it has a fuckload of points on it) but that's just an incentive to use the cards, not an intrinsic case for them.
I think most people would be much better off just using debit cards, and operating with the funds they actually have. And, again: it is in fact easy for me to say that today, but I believed the same thing when I was younger.
The crazy thing is coming to realize how little your credit score matters if you decide not to play this game. People say it will impact your ability to get a mortgage or a lease, but: not my experience!
Totally agree, but - and this is another example where the rich(er) benefit - if you actually have the money and good financial discipline you're better to put everything on your CC and pay it off in full monthly. Let the merchants finance for free for 3 weeks, plus maybe get perks like purchase protection and extended warranty.
Could be but in my personal experience, it has been the exact opposite. That said, I don't use banks. I work with credit unions exclusively. Maybe they have very different rules when it comes to handling debit card fraud.
The only time I have needed a debit card are when a place doesn't accept credit or charges a heavy markup for credit. Someone here mentioned Robinhood virtual credit card - I need to look into it, but I use a similar service and I keep my debit card locked only to unlock it for the exact window I am actually using it.
> rented cars, all that stuff. There's really been no point I can think of where I felt like having a revolving credit card would have made any of it more manageable.
I'm unaware when you last rented a car but when I rented a car last month, the company put a $500 hold on my credit card. That credit card hold went away after I returned the car in good condition a week later. I imagine, if I had used a debit card, that $500 hold would have made $500 disappear from my bank balance during that time. When my nephew rented a car, they put a $2000 hold on his credit card, I'm assuming because he's younger than 21. He certainly doesn't have $2000 to spare in his bank account.
The same credit card got me a free upgrade on the rental car, primary insurance protection during the rental period (I didn't have to buy the $40/day rental insurance) and got me 5% cashback on the full rental amount essentially undoing state taxes. The estimated cash value of these would have been ~$500 for the week. Using the debit card from my credit union would have got me exactly $0 (plus a reduced balance the whole time).
OTOH, a credit union shipped me a chipped debit card preactivated. The debit card shipped via regular USPS mail and was stolen along the way. I always keep $400 in my checking account, so the theif emptied my card at Target and 7/11. Within hours of receiving text about the charges, I called my credit union, informed them of the detail. They sent me a binder full of documents to sign. The whole time the money wasn't refunded. They took a month to review evidence and refunded me $50 (of the $400) and told me I would have to provide additional evidence that needed wet signatures, notarizied to receive the rest ($350). Every notarizied page in my jurisdiction costs $150.
> EFTA Reg E gives banks 10 days to make you whole
Interesting - any idea if this applies to credit unions too (because then you just got $350 back into my pocket!)
> I presumably still somehow owe them $40, and it wrecked my credit score.
> People say it will impact your ability to get a mortgage or a lease, but: not my experience!
Are these mortgages or a leases after you became wealthy or around the time when your credit score was wrecked? I imagine the effects of the Nordstroms credit card wore away 5-7 years (I don't recall exactly which) after the $40 was reported as late. So if more than 7 years passed between these two events, you might have a perfect FICO score now, even though you don't know it. I imagine you can just go to CreditKarma for free and use their free "dispute" charge option to permanently erase that Nordstrom black spot forever. I don't think anyone cares a multimillionaire had a forgotten $40 invoice when they were 19.
Also, for anyone above $1MM in liquid networth, most financial institutions treat the credit history as a signal and not the primary signal. I believe you have been above that by a healthy amount for a while now :)
PS: I am a HUGE fan of yours. I wrote all of the above expecting you absolutely wouldn't have a second to read a word but if you do, Thank You not only for reading (I hope atleast some of it helps you) but for your comments on HN from which I have learned a lot.
I think EFTA covers the mechanism of how debit cards work, not the institutions that issue them, but I'm not an expert. I would lean towards keeping an account for the card I use in normal transactions at one of the Big Four banks.
Uff. I perhaps can imagine what you were going through the next 10 years.
PS: I actually would like to hear your thoughts on where cybersec is headed in the age of LLMs (Mythos or not), would it be OK for me to reach out about it (unless you've written about it already)?
Maybe not harder, but one undeniable downside is that you've been paying roughly 2% more for roughly every purchase you've ever made (other than rent or mortgage payments and a few other exceptions) than you would have if you had good credit and used a credit card, due to how the US payments market is structured.
To be clear, I'm not saying that this is a reasonable state of affairs, but it's the reality.
Another issue that comes to mind are rental cars – while there's no real difference in risk protection to merchants (it's not like a credit card on file can magically make a wrecked or never-returned car reappear), many rental car agencies require them; I suspect because they use them as something of a proxy indicator of "generally responsible-enough behavior to have been issued one by an institution also exposed to risk".
Again maybe I’m wrong but I don’t agree they are equivalent. It sure fucking feels that way, the money isn’t threatened from my account.
I can think of plenty of times where the upsides of having a credit card were realized though.
I did have a six-figure debt to a bank and if didn’t make my payments they would take the house from my family! Much higher stakes than any credit card debt I’ve ever had.
I do have a debit card though and it’s actually not that different from a credit card. If I spend money not in my account I would get charged a $25 overdraft fee plus interest.
A quick googling says that about half of all credit card holders carry some kind of balance each month, so clearly there must be some people in my orbit not paying it off.