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Life without Convenience Cards?

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  • Life without Convenience Cards?

    I searched the forum trying to find a previous post on this topic without success, but it pertains to those who live life without using credit/convenience cards. Although I have no credit card debt (I pay them off in full every month and track every expense), I have always considered canceling all of them and going debit only. I am though concerned about the "consequences", namely:
    1. Loss of credit history which would impact a future home purchase (or any other major purchase for that matter for which I might need to access some credit);
    2. Loss of "rebates" in the form of cash back/points on standard purchases;
    3. Other issues that might not come to my mind immediately that others can identify.
    For those of you who have gone credit/convenience card free in your life:
    1. When did you cancel the cards?
    2. What were the positives and difficulties that you encountered?
    3. Did anyone who cancelled their cards eventually find themselves in the position that s/he opened new accounts again?
    Edit: for new readers, I am not one who struggles with my cards. I save the max in my Roth 401(k)/IRA, HSA, fund my emergency cash and broker age account. If I do not have the cash to cover a charge, it has no business on my credit card. This is merely a philosophical question for which I am interested in hearing may different approaches to how credit cards play a role in your financial lives...
    Last edited by F0017S0; 05-01-2022, 06:20 PM.

  • #2
    Don’t go debit card only! Debit cards do not have the same level of legal protections as credit cards. And when a debit card is compromised, it is not the bank’s money which has been stolen. It is YOUR money, taken directly out of YOUR bank account, and there is no guarantee that that money will be returned promptly (or even at all). Some people who are hopelessly irresponsible with credit cards may not have any other options, but you are not irresponsible with credit cards, so why take that risk?

    Why not instead whittle your credit cards down to two? One primary card (I would recommend no annual fee 2% cashback card) and one backup card which you only use if the primary card is compromised. That simplifies things, while still giving you the benefits of using a credit card instead of a debit card to pay for your purchases.

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    • #3
      If you aren’t one of the people who is unable to control their credit card use, there is absolutely no advantage and several disadvantages to not using them.

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      • #4
        Originally posted by artemis View Post
        Don’t go debit card only! Debit cards do not have the same level of legal protections as credit cards. And when a debit card is compromised, it is not the bank’s money which has been stolen. It is YOUR money, taken directly out of YOUR bank account, and there is no guarantee that that money will be returned promptly (or even at all). Some people who are hopelessly irresponsible with credit cards may not have any other options, but you are not irresponsible with credit cards, so why take that risk?

        Why not instead whittle your credit cards down to two? One primary card (I would recommend no annual fee 2% cashback card) and one backup card which you only use if the primary card is compromised. That simplifies things, while still giving you the benefits of using a credit card instead of a debit card to pay for your purchases.
        Yes, this is what I was forgetting in my pondering of the question. I am able to take advantage of BankAmerica’s platinum honors preferred rewards benefits, so I have two there. One is at Citi, two at AmEx and my first personal card at CapitalOne I have kept for the credit “longevity”. I try and use them every once in a while to keep them fresh and the issuers off my back. I might consider cutting the wallet some…

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        • #5
          Originally posted by Anne View Post
          If you aren’t one of the people who is unable to control their credit card use, there is absolutely no advantage and several disadvantages to not using them.
          If I don’t have the money in cash to pay the balance in full each month, it has no business being on my card until I can pay for it in full.

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          • #6
            As mentioned, going debit card only would be a terrible idea. It seems like you pay your credit cards off every month and don't overspend so why are you trying to complicate things?

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            • #7
              Cutting back to just a couple of cards won't affect your credit score too badly (especially if you keep your oldest card). And an easy way to keep reserve cards active is to put a small recurring charge on them (like a Netflix subscription, or your monthly utility bill) and put the card on autopay. Then you just have to remember to check the account once a month to check for any fraudulent activity (you should do this with all your credit card and bank accounts, even if you've set up all the possible fraud alerts the bank offers for that account).

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              • #8
                Originally posted by CordMcNally View Post
                As mentioned, going debit card only would be a terrible idea. It seems like you pay your credit cards off every month and don't overspend so why are you trying to complicate things?
                Wanted to actually simplify things, but I’ll just rejigger some recurring expenses and keep the status quo.

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                • #9
                  Originally posted by artemis View Post
                  Don’t go debit card only! Debit cards do not have the same level of legal protections as credit cards. And when a debit card is compromised, it is not the bank’s money which has been stolen. It is YOUR money, taken directly out of YOUR bank account, and there is no guarantee that that money will be returned promptly (or even at all). Some people who are hopelessly irresponsible with credit cards may not have any other options, but you are not irresponsible with credit cards, so why take that risk?

                  Why not instead whittle your credit cards down to two? One primary card (I would recommend no annual fee 2% cashback card) and one backup card which you only use if the primary card is compromised. That simplifies things, while still giving you the benefits of using a credit card instead of a debit card to pay for your purchases.
                  All debit cards with EMV (chip) technology offer the same fraud protection as credit cards, from my understanding that i saw on a youtube video.

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                  • #10
                    Originally posted by F0017S0 View Post
                    I have always considered canceling all of them and going debit only.
                    Yeah definitely don't do this.

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                    • #11
                      Originally posted by Craigslist View Post

                      All debit cards with EMV (chip) technology offer the same fraud protection as credit cards, from my understanding that i saw on a youtube video.
                      The protection comes from the card issuer/bank and the fact that is credit and not (initially) your own money. Not from the chip.

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                      • #12
                        Originally posted by Craigslist View Post

                        All debit cards with EMV (chip) technology offer the same fraud protection as credit cards, from my understanding that i saw on a youtube video.
                        No, they do not. The issue isn't chip-related, it's that someone who manages to compromise your debit card is pulling money DIRECTLY OUT OF YOUR PERSONAL BANK ACCOUNT. That money won't be returned to your account until the bank investigation has concluded that the transaction was fraudulent. In the meantime you're out the money (which could mean that other bills, like your mortgage, won't get paid on time).. And if the bank decides that the charge WASN'T fraudulent, you can kiss that money goodbye forever, because they won't be returning it. That's rare, but it can happen.

                        With credit cards, the theft is of the bank's money, not yours. In the long run that costs all of us (which is why banks try so hard to fight credit card fraud), but at least if your credit card is compromised you're not going to be late paying your mortgage or your other bills.

                        And the chip protection (whether on a credit card or a debit card) isn't as robust as you think, because these days a lot of the fraud is done via online shopping, where the chip is irrelevant (because the online merchant obviously can't read it).

                        Edited to add: A chip card is primarily protection from a card skimmer, which can read the information encoded on the magnetic strip on your card. Touchless pay (an RFID card or paying via your phone with Apple Pay or Android Pay) offers an additional level of protection, since the card is never even inserted into a reader.

                        But think about buying something online. What information do you need?

                        The name on the card.
                        The billing address for that card.
                        The card number.
                        The card expiration date.
                        (For a debit card) the PIN
                        (for a credit card) the 3 or 4-digit CCD number printed on the card.

                        That's it. Chip or no chip, once a thief has that information, it's shopping time!

                        Your best defense against fraud is first, never use a debit card anywhere except at an ATM (ideally at the bank you bank with), and second, turn on every transaction and fraud alert associated with each card and receive those messages by both text and email. It's a pain when you pump gas and your phone helpfully texts you the message that your card was just used at XYZ Gas Station, but when you get a text at work telling you your card was just used to buy a swimsuit at Hot Miami Styles and you didn't order anything, you'll appreciate it. (I hope the person got a nice swimsuit at American Express's expense, because that was the only purchase they were going to make with my card. As soon as I received that text I immediately called the AmEx Fraud Department and had the card shut down and a new one with a new number sent.)
                        Last edited by artemis; 04-29-2022, 10:09 AM.

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                        • #13
                          Don't underestimate the value of CC rewards.

                          If you spend ~$50k/yr, and put all of it on a credit card earning 2% back, that's $1k/yr. That's not trivial. If you invest that over 30 years that's $100k.

                          Most credit cards will double the warranty on anything. Also allow you to return anything (even if the seller doesn't accept returns). Rental car insurance. Etc.

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                          • #14
                            Originally posted by awesomesauce View Post
                            Don't underestimate the value of CC rewards.

                            If you spend ~$50k/yr, and put all of it on a credit card earning 2% back, that's $1k/yr. That's not trivial. If you invest that over 30 years that's $100k.

                            Most credit cards will double the warranty on anything. Also allow you to return anything (even if the seller doesn't accept returns). Rental car insurance. Etc.
                            I do value the rewards, especially the BankAmerica Preferred Rewards (Platinum Honors). I think I have 120k points on that card just from general spending (approx. $1200 in cash back), and that’s just since last June when I got it.

                            I won’t make changes based on the advice given here…

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                            • #15
                              Originally posted by artemis View Post

                              No, they do not. The issue isn't chip-related, it's that someone who manages to compromise your debit card is pulling money DIRECTLY OUT OF YOUR PERSONAL BANK ACCOUNT. That money won't be returned to your account until the bank investigation has concluded that the transaction was fraudulent. In the meantime you're out the money (which could mean that other bills, like your mortgage, won't get paid on time).. And if the bank decides that the charge WASN'T fraudulent, you can kiss that money goodbye forever, because they won't be returning it. That's rare, but it can happen.
                              i think this is right
                              this to me is the essential benefit of the credit card.
                              if someone bangs out a $12k fraudulent transaction on my visa, i'm letting that baby ride.
                              on some level at that point (minus some interest possibly) it's the card company's problem.
                              much less fun if they tap it out of my account.

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