I received this notice from Crappy Credit Union:

Soon, there will be a change to the way electronic payments, also known as ACH debits, are processed by the Federal Reserve. On September 15, 2017, the Federal Reserve will start processing most ACH debits on the same day they are transacted. That means some of your payments could come out of your account faster than before.

This is an industry wide change that is the result of a faster and more efficient ACH network (the network that moves money between banks). All banks and credit unions will be adjusting their electronic payment processing times accordingly.

Typical ACH debits include payments to utilities, health club dues, credit card providers, etc. Some other payments that you may not think are electronic but may process as an ACH debit include the following:

Paper checks written to merchants such as grocery and big box stores may be converted to ACH debits. If so, these checks can post and clear on the same day.

Debit cards from retailers (such as Target or Nordstrom) that link to your checking account and use the ACH process. If so, the transactions can post and clear on the same day

Still never understood the benefit of using debit.

Studies have shown that people spend less money when using debit over credit. You can believe it or not believe it. When people use cash the part of your brain that processes pain is activated, although in a different way than physical pain. When people use debit the same thing happens to a lesser extent, but when you use credit it is not affected at all. This is backed up by other data, including the fact that McDonald's average ticket went up something like 50% when they started taking plastic.

As opposed to what, cash, check or credit card?

@Tarantado wrote:

Still never understood the benefit of using debit.

Debit makes me know how much I have and can spend, where credit card allows me to spend more..I use my debit card for my restaurants, easy to track, no interest charged, and i get cash back with my credit union bank. I keep my credit card for certain expenses, but hardly ever pull it out when I have my debit card, definitely keeps me from over spending, and believe me over spending would be easy to do....I rarely have cash on me unless I'm doing a bar audit.

For people who normally use credit cards. I would be interested to see what would happen if the next time they went out to dinner at a place they frequent they pulled cash out of their account and paid with it instead of with their credit card. Then compare that to your average check on your credit card.

@bgriffin wrote:

For people who normally use credit cards. I would be interested to see what would happen if the next time they went out to dinner at a place they frequent they pulled cash out of their account and paid with it instead of with their credit card. Then compare that to your average check on your credit card.

From where I sit, it's a no brainer....you are more generous with a credit card, I'd easily have that upgrade drink and I'm not sure it gets paid off so easily, as with debit where no bill comes in......no brainer for this shopper. I check my debit card daily and know exactly where I stand with my funds. I don't understand why a credit card would be better.....

Yes. And research agrees with you. Even people who claim because they pay off their card every month it means they wouldn't spend less would spend less if they used cash.



Edited 1 time(s). Last edit at 08/02/2017 07:35PM by bgriffin.

@LisaSTL wrote:

As opposed to what, cash, check or credit card?

Credit card.

I have a debit card on-hand, mainly for ATM purposes. Other than that, it's credit card almost always, unless it's cash only or it's significantly cheaper to pay with cash.

@bgriffin wrote:

For people who normally use credit cards. I would be interested to see what would happen if the next time they went out to dinner at a place they frequent they pulled cash out of their account and paid with it instead of with their credit card. Then compare that to your average check on your credit card.

Assuming it's not for a shop or reimbursed by someone else.....

I would order typically with no drink (save's $3-5 if non-alcoholic), unless I really want a nice draft beer. When it comes to entrees, unless I'm out on a date to not create any superficial judgement on how I normally do things, I usually lean towards sharing a large entree with someone and splitting the costs, unless I'm trying some completely new and within reason, or if I'm dining by myself. Whether I spend with credit or cash, spending using credit will not influence me to spend any different vs. spending with cash.

When I look at my credit card, I merely look at it as a proxy, when I look directly at my bank account, since I exclusively pay my statement balances in full every month, unless I planned out a 0% finance promotion on a separate, large purchase like my furniture for example.

Besides, I'd never pay cash if I had an equal credit card option, as I do benefit immensely with credit cards. Ex. After $4,000 of normal expenses spent within 3 months, I'm gaining an instant bonus of $625 worth of points without even considering the 2%+ cash back for all money spent. Spending with cash / will never bring back anything close to this return.



Edited 1 time(s). Last edit at 08/02/2017 08:20PM by Tarantado.

We have had this discussion before and I read the studies. So yes, a majority of people do exactly as bgriffin suggests, but that doesn't mean all people do. My main credit card offers cash back on everything, but they rotate specific categories by quarter and double or triple the cash back. Since I track my finances across categories and payment devices, it keeps me hyper aware of what is being spent. That is not to say I have been this way my entire life. In my early 20s I spent money on credit cards like it never needed to be paid back. It was a painful lesson to learn paying them off was lasting longer than the items purchased.

I always use debit or cash. I don't have any credit cards at all. I don't much care for spending any money. If I'm not on a shop, I write down how much I spent and what it was on so I can check for discounts or coupons next time that I may not have had with me. I grew up kinda poor... well... pretty darn. We grew a lot of our food, I got the hand me downs from the hand me downs and on and on, and we had spring water without a well. It wasn't unusual for power to be off weeks at a time and to pack water, hand wash or use the wringer washer, and to spend 14 of my 16 waking hours outdoors. Sawing wood, busting coal rock, gathering blood root, yada yada. That aside, I still feel poor even though I make 5-10 times (depends on my work) what my folks made/make since retirement and dad's injuries. This rural, southern, country livin'. Today, I spent $10.81 on 3 days worth of food for 2 people... I tried to figure out how I could make it cheaper next time. Bought rice, beans, potatoes, onions, and chicken... I actually stopped by an ATM to get cash out to control my spending and allotted myself $15 for the 3 days (rest of the work week) plus the small amount of change in my purse I found this week jogging. Eh. I'm a tight wad who wants to buy a nice house in a forest near some water where people don't usually go...

A debit card offers protection and cash does not.

With a debit card, you have an electronic record of your purchases.
With cash, you have to save your receipts.

With a debit card, if a purchase goes sideways i 60 days, your bank will refund your money.
If you pay with cash and the purchase goes sideways, it's up to the merchant to make it right.

With certain debit cards, if you find a lower price later, you will be refunded the difference.
No such luck with cash.

With a debit card, you earn rewards for using it.
No rewards for cash.

@Tarantado wrote:

Still never understood the benefit of using debit.

I think he meant he never understood the benefit of using debit over credit.

I remember having this discussion in depth, and honny and me were the only two that preferred using our debit cards...got pretty heated, so, too each his/her own, I'm not changing...if it's not broke, don't fix it.

Okay.

For those who use it responsibly, credit is always better. You get a 30 day interest free period to pay for your purchases.

@bgriffin wrote:

I think he meant he never understood the benefit of using debit over credit.

Although in real life I use a cash-back credit card (and pay it off in full each month), for mystery shopping I've used a debit card. However, as I move into shops that require a larger outlay I'm thinking of taking over a rarely-used charge card and using it for my business.

Why not just use cash? (Yes, I see Honny's response. But cash is king, baby.)



Edited 1 time(s). Last edit at 08/04/2017 02:39AM by iShop123.

@HonnyBrown wrote:

For those who use it responsibly, credit is always better. You get a 30 day interest free period to pay for your purchases.

1 month of interest on $1000 is a whopping $1. Let's say you're really killing it on the cash back and all of your $1000 purchases are at 5%. Using that credit card has "made" you a whopping $51. The problem is Dun & Bradstreet have done studies and people spend 12-18% more using credit cards than cash. So while you "made" a whopping $51 you most like spent an additional $100 that you wouldn't have otherwise spent. So you are $49 behind.

[www.nerdwallet.com]
[www.psychologytoday.com]
[www.wisebread.com]
[www.moneycrashers.com]

@bgriffin wrote:

1 month of interest on $1000 is a whopping $1. Let's say you're really killing it on the cash back and all of your $1000 purchases are at 5%. Using that credit card has "made" you a whopping $51. The problem is Dun & Bradstreet have done studies and people spend 12-18% more using credit cards than cash. So while you "made" a whopping $51 you most like spent an additional $100 that you wouldn't have otherwise spent. So you are $49 behind.

[www.nerdwallet.com]
[www.psychologytoday.com]
[www.wisebread.com]
[www.moneycrashers.com]

Studies like this doesn't apply to everyone, just like the BMI index.

Let's throw this credit card promotion in the mix, which does not need any age requirements for you to obtain.

www.aarpcreditcard.com

Signup bonus is $200 for $500 spent within the first 3 months of the account opening. Even if the whole 12-18% extra spent applied to everyone, $200 puts you ~$100 ahead, in that case. Not only that, use this card on reimbursed / expenses cover within your lump sum fees from your mystery shops gives a decent $200 non-taxable bonus. That's $199.00-199.50 more than than your 1-2% cash back from a typical debit card ($0.50-1.00 cash back on $500 spent).

If you only use cards with sign up bonuses and then discontinue their use you are absolutely right.

I buy what I want to buy no matter the form of payment. I cut up my debit cards as soon as my bank sent them. I have never used an atm in my life. I mostly use credit cards though I always have cash on me, but I have 0 debt because I pay them off every month. The credit cards I have I've gotten because of some sort of promotion like spend $500 in three months and get $100 statement credit or a 0% promo for 12 months (or both), that kind of thing. My current favorite is my Southwest card because I get free flights using it. I have another credit card that pays .25 cents every time I use it so I only use it for purchases under $5. It does add up since I do around 50 convenience store shops per month with a small required purchase. I'm not knocking debit cards for someone else, they just aren't my thing. Heck, I can carry a couple hundred dollars in my wallet for a few months without spending any of it, no problem.

@JASFLALMT wrote:

I buy what I want to buy no matter the form of payment. I cut up my debit cards as soon as my bank sent them. I have never used an atm in my life. I mostly use credit cards though I always have cash on me, but I have 0 debt because I pay them off every month. The credit cards I have I've gotten because of some sort of promotion like spend $500 in three months and get $100 statement credit or a 0% promo for 12 months (or both), that kind of thing. My current favorite is my Southwest card because I get free flights using it. I have another credit card that pays .25 cents every time I use it so I only use it for purchases under $5. It does add up since I do around 50 convenience store shops per month with a small required purchase. I'm not knocking debit cards for someone else, they just aren't my thing. Heck, I can carry a couple hundred dollars in my wallet for a few months without spending any of it, no problem.

Your better than I, 200.00 in my wallet would last a day...debit card controls my (can't get rid of) need for spending money....I applaud you, we all have to know ourselves and do what's best. I never carry cash,
can't remember what I spend with cash, debit shows me, plus cash back everytime I use debit card works.

Right, the cash is for energencies like being somewhere that doesn't accept credi cards or if their machines are down. Other than gas, personal care, household items, and groceries, birthday and Christmas presents, I rarely use cards for anything except for mystery shopping expenses. A few times a year I go clothes shopping. The thing is, I am so frugal year round, when I feel like splurging I can buy what I want with no guilt or pain.

@bgriffin wrote:

If you only use cards with sign up bonuses and then discontinue their use you are absolutely right.

That's basically Credit Card Churning 101.

Then you find some unique cards, with amazing benefits, some with no fees:

1. One of my Everyday Carry (EDC) cards, Discover, offer 90 day price protection (I ended up getting $40 back on a purchase I made a couple months ago because I ran into a lower price!).

2. Then another is the TravElite which gives me TSA-precheck as part of the bonus + $100 per year (for as long as the program stays) for any airline on-board purchases (free cocktails!!)

3. Then you have AMEX and Discover, who likes to partner with their clients and give away money.... $40 off $40 to sign up to Sam's Club, $10 free Kohl's cash every month, etc.

I know I sound like an Inside Sales Intern for these credit card monopolies, but if you fight the urge and purely view credit as merely a proxy to your actual funds, is there really any downsides once the soft skills of understanding and maximizing credit are learned?

Yes. There are. I agree there are instances where credit makes more sense. Sign up bonuses for sure. JAS' card that gives $.25 per purchase is great for shopping convenience stores. Having an AMEX card simply for the partner deals is spectacular idea if you can get the fee waved. We are talking about 2 different animals though. You're talking about having specific cards for specific uses that you only use for that specific thing. What I'm talking about are the people who use credit for everything and then pay them off each month and state they don't spend more doing so. They do. Research shows they do over and over and over and over.

@bgriffin wrote:

Yes. There are. I agree there are instances where credit makes more sense. Sign up bonuses for sure. JAS' card that gives $.25 per purchase is great for shopping convenience stores. Having an AMEX card simply for the partner deals is spectacular idea if you can get the fee waved. We are talking about 2 different animals though. You're talking about having specific cards for specific uses that you only use for that specific thing. What I'm talking about are the people who use credit for everything and then pay them off each month and state they don't spend more doing so. They do. Research shows they do over and over and over and over.

Haha we can keep going back and forth on this. My apologies on side tracking that with my other points, but I'm still connecting back to completely replacing your cash/debit with credit, as sometimes there aren't any new credit cards to sign up for (thank you Chase and AMEX for attempting to control the bonuses a bit!!).

You can point out research, but can we also agree that a lack of financial sense in the first place is another contribution. Credit has always had a negative stigma in our society, at least in my lifetime. However, why can't this stigma change with better education and understanding on how things work?

Finance guru's like Dave Ramsey preach on no credit cards altogether, which is actually one of the few things I strongly disagree with him about. But at the same time, it makes sense if the average Joe has a lack of financial sense in the first place and his target audience is the general is average Joe with this kind of background.

Let's also add the fact that most people probably see credit card for its credit limit vs. looking at the end cost (after bonus, after extra cash back, etc.), then immediately looking at your available cash in your checking account/safe. The latter literally ignores interest rates and credit limits; hence, why I emphasize treating credit as just a proxy. Credit for your business and incorporating the interest is another animal though, as your foresee all this in order to turn a profit projecting months or even years into the future; but that's Business and Economics 101, which is different from what I'm talking about haha.



Edited 1 time(s). Last edit at 08/04/2017 04:33PM by Tarantado.

@Tarantado wrote:

You can point out research, but can we also agree that a lack of financial sense in the first place is another contribution. Credit has always had a negative stigma in our society, at least in my lifetime. However, why can't this stigma change with better education and understanding on how things work?

The lack of financial sense certainly doesn't help, but the fact still remains that people spend more with credit. People with excellent financial sense spend more with credit. More education isn't going to help because it's a psychological issue. When you spend cash (and less so but still true with debit) the pain of paying is bound to the pleasure of what you have purchased.

Let's say you are in the market for a new TV. You have $1000 in your pocket that you want to spend on a TV. So (for simplicity's sake) you take that $1000 to a store and say I want the best TV I can get for this amount. And you buy a TV for $1000. On the other hand you decided you have $1000 in your checking account that you want to buy a TV with, but you're a "credit" user and want your points or extended warranty or whatever reason. So you go into the store to buy your $1000 TV and you learn about the new wiz bang TV that is $1100. Even if you have the extra $100 in your pocket when you go in with cash, it will be much more difficult to talked into spending it when you pay cash. When you use a credit card you don't bond the pain of spending the extra $100 to the benefit, only see the benefit.

So maybe you're a person who wouldn't spend the $100 on a TV or some other big person. There are certainly people who do that. But a person who uses credit for everything will have thousands of transactions in a year and there will be some that they are more susceptible to. Maybe it's getting the venti instead of grande at Starbucks. Maybe it's offering to pick up your coworker's lunch one day at McDonald's. Whatever. EVERYONE has a weakness and over the course of year EVERYONE will at some point spend more because they used a credit card instead of cash or debit.

And let's be clear. I'm not saying people who always use credit have bad financial sense. I'm not saying they don't get enjoyment out of whatever larger amount they spend. I'm not saying the amount they spend isn't worth it. I'm not saying they are overspending. All I am saying is that at some point they are spending more using a credit card than they would if they only used cash. Does that amount vary by person? Absolutely. But it's still there.

This is exactly how I am. I grew up poor. Or as Oprah calls it, "Po'". Most of the time I only buy what I need, but I have zero guilt about going on a shopping spree from time to time. I have carried the same $50 around with me for weeks on end, because we use credit cards for everything.

@JASFLALMT wrote:

Right, the cash is for energencies like being somewhere that doesn't accept credi cards or if their machines are down. Other than gas, personal care, household items, and groceries, birthday and Christmas presents, I rarely use cards for anything except for mystery shopping expenses. A few times a year I go clothes shopping. The thing is, I am so frugal year round, when I feel like splurging I can buy what I want with no guilt or pain.

i treat cc similar to cahs or debit. i only spend what i can afford & pay off by due date. unless 0% promo which i always pay like triple the minimum amount. debit & cc earn points or cash back. cash doesn't. cash is very dirty.