![]() ![]() can't be reported to the credit bureaus and, thus, they don't build credit. of Massachusetts, noting that "debit cards. It's a pay-once-a-month debit card - that pays you free money every month.Īnother advantage: quotes Martin Lynch, director of education of the Cambridge Credit Counseling Corp. But as long as you can manage that, a credit card isn't really a card you use for taking out long-term credit at all. Of course, you do need to remember to pay your credit card bill on time, so as not to get hit by late fees. ![]() Are you going to turn it down because you're not being offered enough free money? Granted, with the ultra-low interest rates that banks are paying on checking accounts these days, free float isn't as profitable as it used to be - probably only pennies per credit card billing cycle. ![]() (Super-investor Warren Buffett calls this concept of using someone else's money, and collecting interest on it for your own benefit, "free float," and deadpans that his business partner "Charlie and I find this enjoyable.") Depending on the date of purchase and the due date on your credit card bill, you may not have to pay that bill for as long as a month - which means you may be able to hang on to your money, and collect interest on it at your bank, for that time. In contrast, a charge placed on a credit card is a debt that doesn't come due - and needn't be paid - until your credit card bill is sent to you. Consider: When you pay for a purchase - large or small - with a debit card, that money is almost immediately deducted from your account. (Granted, some debit cards offer rewards of their own - but they're rare, hard to find and usually much less generous.)īut rewards are only the most obvious monetary benefit of choosing credit over debit. With card companies charging retailers fat interchange fees for every transaction they process, they can afford to pay you generously when you "choose plastic." Airline miles "points" redeemable for cash back, account credits, merchandise, and gift cards and just plain cash-back offers, as high as 5 percent, all make the choice between credit and debit a bit of a no-brainer. To cite the most obvious example, credit cards often offer you "rewards" for using them. But they're not at all equal in the financial benefits they convey to a consumer. Consumers ages 18 to 29 use debit cards more often than any other age group when making small purchases.īut here's the thing: Debit and credit cards may be nearly equal in their convenience of use when shopping for small items (eliminating the need to carry weighty pockets, jingling with unwanted coins). When the data is broken down by age group, it turns out that millennials are even more fond of debit cards than the average shopper. And as a result, reports that the older a consumer is, the more likely he or she is to pay for small purchases in cash than to pull out a plastic card.Īmong plastic cards, nationally, consumers are about twice as likely (22 percent) to use a debit card to pay for a small purchase as to put the purchase on credit (11 percent). Old folks like me, whose memories aren't what they used to be (and maybe never were), like this "automatic" check on spending. There's only so much cash that will fit in your wallet, and if you limit yourself to paying in cash - you eventually run out. Conversely, the older you are, the more likely you've been told, at some point in your life, that shopping with cash is a good way to limit your spending and encourage saving. The younger you are, the more comfortable you are paying with plastic, which didn't gain widespread acceptance in America until the 1960s. On one hand, that's not terribly surprising. Most folks still pay with cash for such small purchases, with folks ages 65 and up having the greatest fondness for paying with greenbacks (82 percent).īut when it comes to the Millennials, 51 percent use plastic to pay for such purchases. And you're not alone.Īccording to a recent survey by, only about 1 in 3 American consumers currently uses a plastic card - credit or debit - when buying something that costs $5 or less. ![]() At least your vices won't hurt you as much as they'd hurt us old codgers.īut the way you're buying your coffee - you're doing it wrong. And you're still basking in the fresh glow of youth. No one's going to nag you about buying a cup of overpriced coffee. Hey, millennial! Yes, you there, standing in line at the Starbucks ( SBUX) counter, tapping away on your smartphone, with the button-like doodads growing into your earlobes - put away that debit card. ![]()
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