Drew Thomas 0:12
You would think that after so many of these, I would know how to start them. Yeah, but this is 2 Cents with Drew Thomas and Jeff Matevish, Jeff Matevish. And we were having a little bit of an, of a personal debate off-mic, about the advantages and disadvantages of debit cards versus credit cards. And we thought, you know, what, why don't we turn the microphones on and have this debate for you? So, I think both of us use both. I mean, I don't think either one of us is completely one side or the other. Right? I mean, you...
Drew and Jeff 0:42
Right, I mean, I'm, it depends on the scenario. But yeah, I do use both. So, and so do I. But my trend is more debit. And I am the opposite, I tend to use more credit. Yeah.
Speaker 1 0:53
And so, we started talking about some of the reasons why that is, and some of the advantages to both. And one of my first arguments was with debit cards, well, I can't overspend, or it's more difficult for me to overspend. If my bank allows me to overdraft my account, or I agree to allow my bank to overdraft because I don't want to be embarrassed when I'm standing at the line at the grocery store, I can theoretically spend more than what's in my, my account, but I'm gonna pay a fee, there is a penalty fee for that. So, you know, it makes me more disciplined. I think my issue comes from the fact that when I was younger, credit cards, and the education around credit cards wasn't as good as it is today. And so, I kind of got in over my head with credit cards, and I try not to use them when I don't have to. Okay, but you made some good points on the credit card side.
Jeff Matevish 1:39
Yeah, I mean, I use credit cards, because I do get points, I get perks, there are perks with a lot of different credit cards. I pay my, my credit card bill on time, in full every month, so I'm not worrying about, I'm not worried about interest rates and all that kind of stuff. I monitor my credit card constantly on my credit card app. I know what I'm spending, so I'm not worried about spending too much.
Drew Thomas 2:02
Yeah. And, and in that case, I would agree that you have a lot of advantages, but being honest, I mean credit card companies would not be in the shape they're in financially, if everybody was as disciplined as you.
Jeff Matevish 2:04
Right, right. They're banking on, yeah, they're banking on people a little more relaxed. Yeah. Yeah.
Drew Thomas 2:19
So, you know, I mean, I know for some people, especially older folks, like my parents and stuff that for a long time, they had a difficult time, sort of separating the two because they look the same. Yeah. Yeah. I mean, your debit card looks the same as your credit card. Right? Right. So, you know, with credit, you're paying interest, theoretically, assuming that you're allowing interest to carry over month-to-month, or purchases, I should say, to carry over month-to-month, you're gonna pay interest on that. Yeah. Whereas on debit, again, unless you're willing to pay a hefty overdraft fee, and even at that, you're not allowed to do that forever. There's, there's gonna be limits to how long you, or how many times you can overdraft your account. Yeah, you have to be more disciplined about only spending what you have. There are sometimes fees with credit cards too. A lot of credit cards have no annual fee. Okay, but some credit cards, there are fees, too. So, if you have one of these super perks credit cards out there that now, for like double points or, or triple airline miles or something like that, sometimes there's an annual fee that you're paying for those privileges. Have you ever done anything with like your points and stuff like that? Do you ever, have you ever traveled on your points?
Jeff Matevish 3:21
I have not traveled on my points. And actually, I've cashed in points recently. I do around Christmas time, like for online shopping, stuff like that. Hey, I'm gonna try to save up points, you know, because you're usually spending a lot of money during the holidays anyway, so if I can save a couple of bucks, yeah, and get that extra gift that, that's what I tried to do. But no, I, it's usually just for online shopping. How about you?
Drew and Jeff 3:45
No, I've never used a lot of my, I do use points from time-to-time, but I don't have that many saved up usually, is my thing. So, I'll use them the same as you. I'll go and I'll, I'll use them around the holidays or something like that as like, you know, found money. Yeah. And that helps whenever you don't have as much cash. But I don't always have a lot of points or anything like that to travel on. I know, I know people that use credit cards all the time. And they've traveled across the country. They've traveled across the pond to England, France, or wherever, just on points. Oh, yeah. I mean, it's amazing. Some of these credit cards, yeah, you get so much back. But again, you're, you're paying a pretty hefty fee usually. Yeah, yeah. So, so as far as your debit you don't really use your debit at all?
Jeff Matevish 4:26
I use it almost exclusively at ATMs, or at my banks ATM just to take it. I'm a cash guy. I mean, still, I prefer cash over, you know, credit if I can use cash. I think it helps me budget a little bit better. I like having, that's true, I like having tan[gible], something tangible. But yeah, so I'll use credit cards, you know, when I gas, that's, for all my subscriptions that we've talked about. Yeah. Yeah. But I don't do any online banking with my debit card. I just, I feel that it's not as safe as a credit card, yeah, you know, when it comes to transactions when I'm giving someone my card or my card number, I definitely prefer credit card over a debit card.
Drew Thomas 5:09
Yeah, I can get where you're coming from there, because it's probably easier to dispute transactions, fraudulent transactions, on a credit card, because it's, it's on your credit line, it's not your cash in your bank account.
Jeff Matevish 5:18
Right, right. When that, when that's gone, you know, your bank can say, okay, well, nothing we can do about it. Yeah. At least with a credit card, you have not paid that yet. You know, yeah.
Drew Thomas 5:27
You said you're more of a cash guy. I mean, like, I remember a time in my life where cash, cash was king, I mean, you, if you had to have cash, and you were going on vacation or something like that, you have to remember to go to the bank the day before you left or something and take out $500, $600 in cash to spend whenever you were out of state. And from a safety standpoint, I would argue that maybe it's easier to have your debit card, because now you're not carrying all the cash on you. Around town, I would agree, I mean, the around town, you're probably only carrying 50 bucks. Yeah, you know, at a time, right. But if you're traveling with all that cash, especially on a plane or a train or something like that, like that's, I don't know.
Drew and Jeff 6:06
Yeah, no, I agree with you on that one. Yeah. But you know, to be fair, you could theoretically use like, if somebody gets your debit card, like they could try to spend a bunch of stuff before you had a chance to shut it down. Yeah. And so, you know, recently with these apps that are out there now that allow you to shut your card down. Before that, you gotta wait till you got your statement to see, you know, hey someone, someone just took $1,000 from me, and I didn't even know it until 30 days later.
Drew Thomas 6:06
Yeah. Or if you knew your wallet was stolen or something like that from you, then you still had to wait to get to a phone, call your bank. Whereas now a lot of times, you can just pick out your app and shut your card off and stuff so they can't get to it that fast. Now there is a, there is a third option out there that we haven't really talked about yet, and that is prepaid cards. Oh, yeah. Which are not as popular as they once were, but prepaid cards are an option for people that want to have sort of like the best of both worlds. Because you can load a prepaid card with, with funds. And you can't overspend. And if it does get stolen, or there's fraud on the card, they can only take what's on the card, like it's not connected to your bank account, and it's not connected to your credit line on your credit card. Yeah. But just like anything else, there's a drawback. There's fees.
Jeff Matevish 7:22
Yeah, yeah. I used to work with a guy that would exclusively shop online only with prepaid cards. Yeah. Yeah. Just because he was, he was so petrified that he was going to have his, his card number stolen. This was, this was before VPNs, and, you know, these services that give you temporary, yeah, credit card numbers. Yeah.
Drew Thomas 7:43
Yeah, that's a good point. There are, there are some now I got it, I got an email from one of my credit card providers just the other day that said that they're now offering the ability, using their app or something, to generate a, you can go in, log into your account, you can generate a card number that is temporarily connected to your real card number, give that number to the retailer. It'll still bill your credit card, but then that number is a one-time use only, like if somebody steals that number, it's, it's, it doesn't matter. It won't work. It won't work a second time.
Jeff Matevish 8:09
I guess, yeah, I know you would talk on a previous podcast episode about services like that, but yeah.
Drew Thomas 8:14
Yeah, that was neat. And then Apple Pay. Yeah, Apple Pay is kind of like the same thing. Yeah, it encrypts your card, right. It's a one-time thing. Yeah, you don't have to go in and manually keep generating it, which is nice. Yeah, but the prepaid cards, I know prepaid cards for a while too, were big with employers for payroll, okay. And it was really big on, on employers that had like temporary workers like around Christmas, where they weren't going to be employing these people long enough to get them onto like their direct deposit process, but didn't want to cut a physical check. So, they would put it on a prepaid, you know, payroll card. But a lot of people got, got upset because they would go to their bank, or they would go to use it, and they would have to pay a fee to get their paycheck. That's like, why am I paying money to get my own money. Yeah. So, I'm already paying taxes, I don't want to pay even more money. Yeah. And then, and then they would say, well, you if you just use it in the store, you don't have to pay a fee. Like if you took it to the grocery store and buy groceries with it, there was no fee. Yeah, but what if I want to pay my electric bill? Yeah, you know, what if I need to pay my rent or my mortgage? Like, I can't do that. So, prepaid cards kind of became not as popular for that kind of thing. Yeah, yeah. There's also been from, we were talking about fraud, and we're talking about safety, like, there's also been a lot of technology changes with cards. Yeah, over the years going from magnetic stripes to EMV chips, now there's NFC chips built in with your card, you don't even have to put your card into the transaction terminal. You just hover your card over top and the information goes. So, any, any thoughts on like, mag stripe versus EMV versus NFC?
Jeff Matevish 9:44
I mean, we had talked previously, I still am not into the tap to pay stuff. I mean, yeah. All of my cards are chip cards and I understand why magnetic strip cards are not safe anymore. I mean, people skim them and it's so easy to get your, your credit card information from a magnetic strip versus a chip. Yeah, actually that to physically put it in the terminal, you know?
Drew Thomas 10:08
Yeah, I remember when chips, when chip cards started becoming really popular about 10 years ago, there was this whole campaign that I remember being out there where you had to, it was, they wanted people to dip their card rather than swipe their card, because everybody was so used to swiping their card, right? And they were told, like, oh, look, we're gonna dip your card and swipe your card. And that just became kind of, that never caught on because it was just weird. Yeah, but I do understand why they did it. Because you're right. I mean, you could take a hotel key card that has a magnetic stripe on it, and if you have the right equipment, which is not hard to get, and you stole someone's card, you could transfer that information on the magnetic strip right over to something else. I mean, it was, it was ridiculously easy to create fraudulent cards that way. Yeah. So, the EMV chips definitely made that more difficult, the NFC chips, they're good for, for helping to prevent fraud to a certain extent, because you're not physically putting your card in, in contact with that machine. So, a skimmer isn't going to work, right, because you're not putting your magnetic strip anywhere near a potential skimmer, true, or something like that. But if you see some of these things on, where they're selling wallets or sleeves for your cards, that say they're like NFC blocking technology, as long as nobody gets too close to you, they're not gonna be able to just pull your information off of that card. But if you ride the subway, if you're in an airport, you go to a concert, anywhere where people are really packed up near you, and they get, there are people that have machines, they can just pull your card information right off of those NFC chips. Yeah, wow. So, you do want to, if you have those kinds of cards, you probably do want to put them into some sort of like a protective magnetic sleeve or something like that, to try to help that.
Jeff Matevish 11:41
So, if you have a physical card, there's no, there's no 100% guarantee that you're safe, pretty much. No.
Drew Thomas 11:49
I mean, you know, unfortunately, we live in a world where nothing is 100% guaranteed to be safe. I mean, you gotta, you gotta take a certain amount of risk, but, but knowing the risks is not a reason to not do it, in my opinion. Knowing the risks is just making you better prepared to deal with them. Yeah, right. So, you take as many precautions as you can, it's no different than getting in your car and driving to work, you put your seatbelt on, you hopefully have your car with working airbags, you do everything you can to try to stay safe. But at the end of the day, you know, you are still technically taking a chance every time you get behind the wheel of a car, or get on a plane, or walk down your stairs for goodness’ sake. I mean, like, nicely said, you know, there's absolutely no way to 100% be safe all the time. But knowing the risks, you take precautions, you do what you can, you know, so I think that ultimately, there's pros and cons to all these things. I mean, like I said, I tend to be more debit, you tend to be more credit, there's, there's pros to your when there's pros to my end, whatever you as a listener decide you want to do is really up to you. But just be aware of what you can do to try to keep yourself as, as safe as you can, you know, and try to get the most benefit for yourself too. Like to your point, if you're really disciplined about credit cards, and you can get a bunch of points and earn miles and all that kind of stuff, go for it. Yeah, you don't have to be like me and be a debit only person, you know, but you know, you just got to be aware of I guess your own spending habits and how you tend to handle your finances? Sure. So, sure. But I'd be curious, we have if you go to ameriserv.com/bankchats, there is a form you can fill out and let us know, give us some comments about the show. I'd be curious, are you team debit, or are you team credit? Or are you in the real minority and are you team prepaid? I don't know, or team cash. Yeah. Team cash. I mean, that's the team cash. I mean, so cash is awesome. You know, you said about cash too and about traveling and stuff. And the only thing, the other thing that, that gets me about cash is, it's one of those things where the positive and the negative are the same. You can't track it. Yeah. You know what I mean? So, if I have cash, and I spend it or it gets stolen, I have no way to go to my bank and say, hey, listen, somebody stole $500 off of me. It's my word against nobody's, you know, so my, no bank is gonna say, oh, well, you claimed your last $500 to, well here. I'll just give you $500, it ain't gonna happen, right. So, there's that too, where at least with the, using a debit or credit card or something. At least there's some trackability there's some chance hopefully that you can prevent that loss then, or recover that loss if it's, if it's out. Yeah, cash is hard. But anyway, anything else? I think we got it. I think we got it. We're good. All right. Well, hey, if you haven't had a chance to subscribe to the show, definitely, we would encourage you to do that. You can listen to us on all the major podcast platforms, Apple, Amazon Music, Spotify, all those happy ones. Plus, you can check us out at ameriserv.com/bankchats as well. The episodes are there. There's all sorts of other good information that you can download and educational stuff. Check it out.
Jeff Matevish 14:42
Yeah. All right. All right. Bye Drew.
Drew Thomas 14:53
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics, as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats, is not intended, and should not be understood, or interpreted to be, financial advice. The host, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The host of Bank Chats is not an attorney, accountant, or financial advisor, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation.
Drew Thomas 15:59
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