21–30 of 398 posts
> An interesting wrinkle about net interest is that most customers don’t contribute much. In much of the U.S., median checking account balances at account creation are only around $3,000 Thats a lot of money not in crypto or stocks. Surprising.
Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
Good advice, but only if you pay off your balance in full every month to avoid the huge interest charges.
Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
Absolutely, but there are so many people in the USA that are excluded from the ability to obtain a credit card - even a secured one - that debit cards are a god send to us. Both Cash App and Venmo sent me debit cards without requiring any ID.
There seems to be a mistake in the math above. It’s not $300 a year in interchange revenue. It would be closer to $12.
Interchange in the US for credit going to an issuer is around 125 bps (and that correlates to the $300 calculation).
But the US is highly regulated on debit and interchange is around just 5 bps for debit. Making the yearly debit interchange revenue to be ~$12.
Which means this account holder in the illustrative example is still a net loss for the issuer.
EDIT: I just finished reading the article. It’s even called out at the end of the post that debit interchange is much lower. I’m confused now how patio11 did his original math knowing he’s aware of Durbin.
Besides the gig economy I heard that a lot of retail businesses like Walmart now pay employees by debit card instead of check. So instead of a check cashing place taking 3% of people's paychecks some bank is taking 1.x% in interchange, and if the bank happens to be owned by Walmart well who would notice.
> a check cashing place taking 3% of people's paychecks You have to pay to deposit your pay in the US?
Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
What? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house.
You’re leaving money and protection on the table by not using them.
Use credit card, it’s the card issuers that are on the hook for fraud. It’ll help you build credit. Use debit when you don’t have the means or credit history.
What? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house.
Using credit in this sense means using a credit card, not necessarily running up a debt in anything other than a nominal sense. Using a credit card and paying off your balance in full every month (so that no fees are assessed) is way better for later loanworthiness and similar credit-based evaluations than using a debit card.