Dave Ramsey wails on credit cards, barking at listeners to ditch them in favor of cold cash or debit cards. I understand his reasons and agree American households often don't restrain, becoming financial slaves to swipes-gone-wild.
However, in the last year, I've come to the conclusion Dave's flat wrong on cards. Here's why.
Awhile back, a greasy perp' stole my debit card number, cut a fake card and used it to fill fuel tanks on his big rig. Like an Alberta clipper, the thirsty 18-wheeler stormed across Canada, snorting diesel siphoned from my checking account.
Debit card safely in my wallet, I was unaware the checking account was having its blood sucked by a rogue semi 2,500 miles away. Each illegal swipe drank cash to the tune of several hundred bucks per fill-up. The scumbag used my account at three gas stations before I was tipped off. He'd stolen over $1,500 before we caught on.
Thankfully, my bank's anti-theft software sniffed an intruder. Computers track the location of debit card use, sounding the klaxon when the same account is used in two geographically disparate locations at the same time. I swiped my card for a ham sandwich in Iowa as the same account was refueling a Peterbilt in Canada.
The banker called me up for a short chat:
"Beard, did you use your debit card today to purchase fuel from a Shell station in Canada?"
"Nope, I purchased a ham and Swiss with my card in Iowa."
"Well, we believe your card's been compromised, so we're freezing your checking account immediately."
It was a mess for a couple days, unable to withdraw any cash until the bank lifted the freeze and issued a new number and card. The money stolen from my account was gone, so I had to submit pages of paperwork to convince the bank to deposit the funds back in.
How did my account number get hacked? I suspect it was stolen somehow when I used it at a gas station. So I dropped a roundhouse on a pretend paper debit card from my daughter's stash and vowed never to use one again.
Debit deceased, better boot up the credit card.
Credit Cards Aren't so Bad
Note: Credit cards only work if you pay them off each month. If you're unable to do this, skip this section, flee from credit and use cash instead.
I missed the convenience of the debit card. It allowed me to keep few greenbacks on hand and instead plasti-swipe groceries, gas and new pants after splitting them on karate kicks. So I dusted off the credit card and began using it instead.
The Visa offers speedy convenience, with more protection than debit. If a sneaky trucker stole my credit card, the anti-theft software would still kick in and alert the bank, but the money would not be pulled directly from my account. With credit, there's a cushion between charge and payment.
Always use a credit card for online purchases, never a debit card. If that creepy porcelain elephant you ordered online never arrives, but the merchant charged your card, you're screwed if you used a debit card. But a credit card company will go to bat and fight the shady merchant on your behalf.
Credit card extra credit: Use a card that pays back a percentage of your purchases. I do this and get a check from Visa for $500 each year. Visa hates consumers that pay in full and get cash back.
What do you think about the cash/credit/debit debate? Is Beard wrong and Ramsey right in saying not touch credit cards?