Timeline for What are the pros and cons of a credit card for a European?
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39 events
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| Oct 16 at 11:03 | comment | added | Daniel | "In terms of chargeback, EU-law only covers credit card chargeback. Purchases where debit cards are used are not covered by EU-law but can be covered by national law such as in Denmark and Portugal. Debit card holders may nevertheless under certain circumstances enjoy protection of the card companies operating rules." Source: commission.europa.eu/document/download/… | |
| Jun 16, 2020 at 10:49 | history | edited | CommunityBot |
Commonmark migration
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| Feb 7, 2020 at 0:41 | comment | added | cbeleites | Let us continue this discussion in chat. | |
| Feb 7, 2020 at 0:41 | comment | added | cbeleites | ... are typically charge cards, so the amount of time they give is on average less than a typical invoice. | |
| Feb 7, 2020 at 0:39 | comment | added | Harper - Reinstate Monica | @cbeleites Interesting, yes, I would call that "cash and available credit". I do not count available credit as cash available to me. Cash is mine; credit can be turned off against my will at any moment. Oh, and to bta's point, I choose (well, greatly influence) which account is being defrauded by not using a debit card at all. That's an InfoSec choice widely advised in the U.S. | |
| Feb 7, 2020 at 0:34 | comment | added | cbeleites | @Harper-ReinstateMonica: Aha. I do have an additional vocabulary question: I wrote "possible cash flow" because I don't know the proper English term: the German term is Liquiditätsreserve meaning the amount of liquid assets plus those assets that can easily be converted into liquid assets plus unused but approved/existing credit lines. I read cash reserve as not containing available unused credit lines? Being German, no cash reserve does make my skin crawl as well, but so do revolving consumer credits. And of course we do Liquiditätsplanung here as well - but then again, our Kreditkarten... | |
| Feb 7, 2020 at 0:13 | comment | added | Harper - Reinstate Monica | @cbeleites interesting about Europe. I attribute the difference more to my knowledge of accounting. Those two options are totally different on a cash flow statement. Having no cash reserve making my skin crawl, however, sure, that's American. | |
| Feb 7, 2020 at 0:09 | comment | added | cbeleites | ... be processed automatically. So it may very well be that my possible cash flow in Germany is far less affected by deciding A vs. B than your possible cash flow in the US. Thanks for the explanation! | |
| Feb 7, 2020 at 0:06 | comment | added | cbeleites | @Harper-ReinstateMonica: we may have found another cultural difference between Europe [or Germany] and the US here: I can withdraw cash money from my credit card account (with that particular bank even without fees). I'm not sure whether I can push more than the positive balance from that account to the connected checking account, but ultimately I could withdraw cash from the credit card subaccount and pay/wire that to the checking account. This may take a day, but even if I usually have my overdraft limit/reserve line of credit set to zero, a small increase can be asked online and should... | |
| Feb 7, 2020 at 0:04 | comment | added | cbeleites | @bta: If a fraudulent transaction comes in, I can usually not choose which account is defrauded, can I? Also, what's the difference between a transaction bouncing on the checking account vs. a transaction bouncing because you hit your credit limit? I may add that here in Europe/Germany, credit cards in the US sense of the word are comparably uncommon, but the checking account typically has an automatic overdraft credit. From what I gather (so no firsthand knowledge), for both this overdraft limit and proper credit card limit 2 month's net wages are a common size. | |
| Feb 7, 2020 at 0:00 | comment | added | Harper - Reinstate Monica | @cbeleites I explained it, but someone deleted it. This incorrectly assumes credit limit is equivalent to cash in bank, infinite fungibility between the two, omniscience, and no serious problems resolving disputes. Credit limit is not money, and can't be spent except on retail purchases. So using cash where you are able to use credit is forecloses your options to spend the $480 bank cash on something else, e.g. Emergencies. These concerns are practical, not fiscal, and are the very reason corporations have "cash flow statements" in addition to "balance sheets". | |
| Feb 6, 2020 at 23:13 | comment | added | bta | @cbeleitessupportsMonica - A non-zero amount of time passes between the fraudulent transaction and you noticing and canceling it. During this window, you can have checks bounce, auto-drafts fail, etc without any warning, generating penalties and fees that vendors are unlikely to refund. | |
| Feb 6, 2020 at 23:04 | comment | added | cbeleites | @Harper-ReinstateMonica: I don't get your argument about the cash flow: A and B both have 500 on their checking account and a credit limit also of 500 (otherwise no choice in card). A pays 480 by debit card. Result: they can still access 520: 20 via debit card, 500 via credit card, A still owns 20 - 0 = 20. B pays by credit card. they can still access 520: 500 via debit card, 20 via credit card. B still owns 500 - 480 = 20. Where is the difference? (BTW, the European version is 500 credit line on the checking account and thus also accessible via debit card rather than having a credit card) | |
| Feb 6, 2020 at 22:54 | comment | added | cbeleites | @bta: at least in Germany, if you pay by debit card + signature, you can cancel that transaction online and the money is immediately back in your account. Canceling stuff paid by debit card + PIN takes longer, but so does canceling a transaction on the credit card (I had that once so far, and it took a couple of weeks including me sending in proof why the transaction should be canceled). | |
| Feb 6, 2020 at 20:43 | comment | added | bta | @dsollen - I'm referring to fees by third parties, like your landlord or the phone company, when you can't pay on time due to waiting for bank reimbursement. | |
| Feb 6, 2020 at 14:56 | comment | added | kiradotee |
Credit cards are convenient in Europe there's no difference in this. You can "tap and go" with both a debit or credit card. Simply tap the device with the card and you've paid. In the UK this is called contactless payments. And if the cards don't have the NFC capability, then it's still the same - you'll have to stick in a debit card and enter a PIN, or you'll have to stick in a credit card and enter a PIN. Identical.
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| Feb 6, 2020 at 14:52 | comment | added | dsollen | @DanM. I do know of debit cards that offer some cash back. However, having researched cards credit cards almost always offer better cash back deals then debit cards. I don't know why, I would have expected equal cash back, but for whatever reason credit cards definitely offered better rewards. Perhaps people came to associate credit cards with cash back so much that it's a larger decision in their choices then debit cards are, or because your debit card is usually decided by your bank? | |
| Feb 6, 2020 at 12:31 | comment | added | Dan M. | @dsollen cash back is not exclusive to credit cards though. Usually it applies just the same to the debit cards. Basically, outside of US and a few other places, it seems the only difference between the debit card and the credit card is that debit card has 0 loan limit. That's all. IRC, it's even implemented the same in some places. | |
| Feb 5, 2020 at 17:51 | comment | added | dsollen | @bta actually in somewhat similar circumstances my credit card company was willing to also waive any fees that resulted from a bogus charge. You may have to know to ask for them to waive the fee, they never preemptively offer to remove charges if you don't care enough to ask; but I suspect most will remove them if asked. | |
| Feb 5, 2020 at 17:24 | comment | added | bta | Often overlooked: even if your debit card has zero liability and the bank repays you in case of fraud, there is still a non-zero time period where you are out the money. Any overdraft charges, late fees, etc incurred during that period will not be refunded, so you can still indirectly lose quite a bit of money due to fraud. | |
| S Feb 5, 2020 at 15:51 | history | suggested | Jens | CC BY-SA 4.0 |
Grammos/typos corrected.
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| Feb 5, 2020 at 14:49 | comment | added | dsollen | @Harper-ReinstateMonica I feel your statement is a too absolute. I admit I would generally be cautious of someone without an emergency fund using a credit card, as it's tempting to abuse one, the lack of emergency fund makes it hard to fix the issue if it is abused, and the lack of an emergency fund may indicate someone who is not wise with money anyways. However, it is possible to use a credit card wisely to earn money on cash back without an emergency fund if you only buy things you would have bought with debit and immediately pay it of. It's rare it's a good idea, but not impossible. | |
| Feb 5, 2020 at 12:26 | review | Suggested edits | |||
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| Feb 5, 2020 at 12:06 | comment | added | Sebastiaan van den Broek | Swiping for small amounts is perfectly possible with debit cards already (at least in Europe and Asia and that's only where I know it to work), same as getting an overview of your spending. | |
| Feb 5, 2020 at 8:51 | comment | added | bracco23 | @JimCullen At least in Italy, whatever the amount of the transaction if you pay using the chip you must enter a pin. A lower limit, like 25-30€, exist for contactless transactions under which you don't need a PIN, but not if you use the chip. Never used the magstrip, do they even still work? | |
| Feb 5, 2020 at 0:00 | comment | added | Jim Cullen | "even with debit cards you usually need to enter a pin", uhh, no? The exact figure varies by country, but no PIN is required for purchases below a certain amount. $100 in Australia. | |
| Feb 4, 2020 at 21:27 | comment | added | Harper - Reinstate Monica | @Peteris The fact which you are stating is a correct one; I respect that. However in your haste to state it, you overlook the fundamental difference of credit vs debit. The rules may be the same but the outcome for the user is very different: In one case the user loses a little credit limit. In the other case they lose the cash, and must now contend with a cash-flow issue not of their making. | |
| Feb 4, 2020 at 21:07 | comment | added | Harper - Reinstate Monica | @Douwe and my thought is, why the heck would you leave cash lying around in a checking account? Put what you need in to pay the bills and get the rest of your money out there working for you, | |
| Feb 4, 2020 at 17:41 | comment | added | Douwe | @Harper-ReinstateMonica "Are you quite sure that Euro banks will put the disputed money back into your account during the dispute?". Someone that has a cash flow problem over a single payment of the type usually done with a credit card (so no cars or houses) is arguably the very last person that should own a credit card Giving that person thousands in credit at a double digit interest rates is almost criminal. | |
| S Feb 4, 2020 at 16:31 | history | suggested | CommunityBot | CC BY-SA 4.0 |
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| Feb 4, 2020 at 16:03 | comment | added | WGroleau | It was my understanding that Visa requires the bank give me the same rights on a card bearing their name whether debit or credit. | |
| Feb 4, 2020 at 14:04 | review | Suggested edits | |||
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| Feb 4, 2020 at 10:30 | comment | added | nigel222 | Add to this in the UK (only?): the credit card company is jointly liable with the supplier for any purchase between £100 and £30,000 even if you just put a deposit on the card. If you can't take action against the supplier (typically because they have declared bankrupcy) you can take action against the card company. Especially useful for booking hotels and flights. The card company will be liable for a replacement flight (which may cost more) if the airline fails, though not if the flight is altered or cancelled under the original Ts&Cs you accepted. | |
| Feb 4, 2020 at 4:16 | comment | added | Peteris | @Harper-ReinstateMonica no, I'm saying that this requirement to put the disputed money back into your account immediately is not an inherent property of credit cards as such, these are specific rights granted by specific local laws only in USA, UK, and some other places. In EU there's the generic Payment Service Directive dispute process, which requires the money to be put back immediately in certain types of dispute but not in others, and applies identically to credit and debit cards; and there's the Visa or MasterCard chargeback process which also does not implement any major difference. | |
| Feb 4, 2020 at 2:47 | comment | added | Harper - Reinstate Monica | @Peteris Are you sure?. In principle, the US system could say the same thing about being literally the same... if you completly ignore cash flow. You have the same dispute rights, same chance of prevailing in a dispute, same reportage, etc. etc. However. During the dispute you will be left with a cash flow problem, as discussed. Are you quite sure that Euro banks will put the disputed money back into your account during the dispute? | |
| Feb 4, 2020 at 0:25 | comment | added | bdsl | In the UK the protection against bad business is an advantage of a credit card over a debit card. As which says "Section 75 of the Consumer Credit Act applies only to credit cards and not to debit cards " which.co.uk/consumer-rights/advice/… | |
| Feb 4, 2020 at 0:02 | comment | added | alephzero | @Peteris There is a big practical difference in the UK, even though there is debit card fraud protection. If you have to contest a transaction of a debit card, you have already lost the money from your bank account, and you can't spend it on anything else until you get it back. With a credit card, you simply owe the card company money, and provided the problem is resolved within the card account period (at least 4 weeks after the disputed transaction) you never pay out any of your own money, because that debt will be cancelled. | |
| Feb 3, 2020 at 22:47 | comment | added | Peteris | This also seems to be a US-specific answer. While the factors listed here apply in US (and IMHO UK as well) with a significant legal difference between debit and credit cards, in most continental Europe these factors are not advantages of credit cards, because (a) theft protection (b) protection from bad merchants (c) convenience (d) report of expenditures would be literally the same for a debit card; in essence, paying is exactly the same, but the only practial difference being terms and conditions of the loan attached on the card. | |
| Feb 3, 2020 at 21:07 | history | answered | dsollen | CC BY-SA 4.0 |