There are many countries where debit cards are the norm and credit cards are extremely rare.
In France, people are so afraid of consumer credit that cards are renamed ‘deferred debit cards’ rather than credit cards, otherwise people do not want them.
Growing up in the EU, living in North America now, it's mind blowing to me how much credit these companies are making available to me. Not that I ever would outside of an actual emergency but I can see how it's tempting to someone who didn't grow up in a financial risk averse society.
It is not risk taking, it is a system that not just normalized the debt, but punishes people for not taking it. When you are recommended to use credit card, so you can function on debt, so that you can get better mortgage later on, then the thing in play is not just "risk aversion".
It's amazing. Meanwhile your fellow Europeans wouldn't trust to lend you their power drill for a weekend, even if you've known each other for 30 years.
My European business banks have never offered any kind of line of credit. Of course they probably would if I needed, and went there to grovel and prostrate myself. In contrast, my American business bank just sends unprompted e-mails sometimes asking if I would like to borrow a bunch of money.
American trust is based on rationality and intuition, while European trust is based on rules and authority. That's why business can flourish much more in the USA.
The availability of credit is a positive imo. Sure, it's possible to trap yourself in debt, but being able to pull that lever in an emergency is valuable. Imo US is better on this front than Europe.
There is also a major difference as I understand it. They need to be resolved at the end of a certain period. There is a legal difference from Credit cards as in there is no continual liability and thus no continued line of credit. Getting a true credit card is also a lot harder here (not France) than a deferred payment card (usually 1 month) and has stricter credit checks.
These are historically called “charge cards” in the US and are common for corporations who give employees “credit cards” for travel and the like.
American Express is big in this market - what looks like a normal Amex Business Platinum card can very well be a charge card that needs to be paid in full at the due date every month.
There are minor differences but the big one is no carried balance between months is allowed. Payment in full due each month.
It's more taboo to talk about revolving credit card than crack addiction for a french.
I don't know a bank that offer them, even the shady online bank.
Historically, these have been issued by "consumer credit" specialized banks like Sofinco; and retail chains ("carte Aurore"); traditional banks would seldom advertise them, if offered at all.
Things have been changing a bit in recent years. Since the "debit" and "credit" nature of the card is now written on them, French folks have started to request "credit" ones for travelling (to rent a car for instance).
My understanding is that for car rental purposes, anything using Visa/MC (and not a national debit network like Visa Debit in the US) will work, it doesn't actually need to be backed by a revolving credit. At a US gas pump, a Frenchie needs to select "credit" even though the card has "debit" written on it. Still, should the clerk refuse the card because it reads "debit" without running it... better have this "credit"-labeled one.
> My understanding is that for car rental purposes, anything using Visa/MC (and not a national debit network like Visa Debit in the US) will work, it doesn't actually need to be backed by a revolving credit.
Many companies will refuse all debit cards, or all cards with "electronic use only" restriction, at least for the deposit, irrespective of the payment network involved.
Visa and MC have basicly all of these configurations, depending on country & legislation:
- Direct Debit
- Deffered Debit
- Rolling Credit
- Installment Credit
And if you are a $MegaBigCorp customer of them, you can customize even more.
indeed. my credit card requires me to preload money from my bank account. it's like there is a second account that keeps a balance that i can spend using the credit card. whenever i use it, the balance is updated. how the credit is paid off i don't know. it could be either right away, or the amount is just hidden by my bank until it is time to pay off at the end of the month. either way, the credit limit is zero. so i can never spend more than i put in first. (though this may be based on how much i spend or be a configurable value.)
yes. it is possible that i can get a real credit limit too, but i didn't check.
these debit like credit cards put a different light on the statistics. as some people here have said, europeans don't use creditcards, and then someone contradicted that with a statistic of how much is paid with credit cards. how much of those credit card payments are made with debit like cards like mine?
europe doesn't want their people to get into credit debt. possibly protection for people is stronger and makes it harder for banks to recover if people fail to pay? but most likely countries just want people to be able to protect themselves from overspending.
like i can get an overdraw limit on my bank account. it is set to a default value based on my income. but i deliberately reset that to zero. i don't want an overdraw limit. if i really need to overdraw i'll change the limit at that time and i think i can even set that it is valid only for a short time and then it resets automatically.
There is a point though - Mastercard and Visa treats them as "prepaid" credit cards, which are different from both true prepaid cards (as issued in the US), charge cards, and true debit cards (former Maestro and Visa Electron). Again, different regions have different lines for this, especially in Europe.
IIRC, bunq in the Netherlands issues Mastercard "credit cards" (with no "debit" annotation as on true Mastercard debit cards). They're treated as credit cards for Mastercard purposes but are backed by deposits.
Here it's more normal to save up for something and then buy it. Rather than buying on credit and then paying it off.
It makes much more sense too.
The financial system is built to stimulate that. For example if you'd buy a house you need to pay about 30% in cash and you can't loan that money somewhere else. This way you get people that know how to deal with money. And also the bank doesn't run a big risk if there's a market slump.
In UK, consumer protection for Credit Cards is guaranteed by law (Section 75 of the Consumer Credit Act), but not for Debit Cards (that's contractual).
“ If, for example, the payment was made by credit card and the product has not been delivered, the consumer can contact their credit card company directly and request a refund.
Credit card firms can usually refund the money quickly, Beurling-Pomoell noted, whereas consumers who paid by debit card must try to claim their money back from the bankruptcy estate.
"Unfortunately, [reclaiming money from a bankruptcy estate] is usually a very long and difficult process. Consumers are generally in a relatively weak position when a company goes bankrupt," he said.
Beurling-Pomoell added that consumers should always consider using a credit card when purchasing a product that they do not immediately receive.”
I think some examples are in order - where has the UK, having recently left the EU, changed its laws so that it was completely out of step with consumer protection? Or is this one thing that made it necessary for them to leave the union, perhaps?
The "consumer protections" of the EU basically amount to communism (i.e., state interference in private matters). So no, that's not a thing the U.K. should emulate.
with a debit card your cash is gone from your bank account in that moment, even if you get it back later (hopefully). With a credit card they are not able to drain your bank account, the risks are entirely on the cc company and they will be significantly more motivated to get that back than a bank would. it's entirely their problem, not yours
misuse is not what I mean, I am talking about if your card is stolen and someone runs up a bunch of purchases before it gets caught, that money is gone from your account and any fees from overdrafts are the account holders problem to deal with and stress they can entirely avoid if they did not have/use a card tied directly to their bank account. I pay close attention to my bank account (as it is important for rent/important bills direct drafted), I only check the credit card when the bill comes in.
users can even avoid interest if they pay that card off every month
I pay everything with my credit card (bills, stores, online, etc) and pay it off at the end of the month. Even my tap-to-pay is tied to the credit card. I never use my debit card anywhere but an ATM. I have never had my bank account violated but I have had the credit card stolen from a store I visited (card company caught it as there was a bunch of fraud from the same store, they let me know and they proactively replaced my credit card)
I have never had my ATM card compromised as it is for one purpose, the ATM
best part of all is my credit score loves the large payments I always make on my credit card
> I am talking about if your card is stolen and someone runs up a bunch of purchases before it gets caught, that money is gone from your account and any fees from overdrafts are the account holders problem to deal with and stress they can entirely avoid if they did not have/use a card tied directly to their bank account
Yes that's what I'm talking about too, and it's called misuse. Liability is capped at 50€ as I said. We also don't have any fixed overdraft fees, only a compared to credit cards low interest rate, but this would also be the banks problem in this case.
Also you still need a pin to pay or 2FA when paying online for European Cards. So that scenario seems very unlikely anyway.
> I have never had my ATM card compromised as it is for one purpose, the ATM but I have had the credit card stolen from a store I visited (card company caught it as there was a bunch of fraud from the same store, they let me know and they proactively replaced my credit card.
I have never had my card compromised, as it only uses the EMV Chip for payments in the civilized world, which you can't clone, and even then you would still need the PIN to pay, or the second Factor.
I also never had my Debit card (what you mean with ATM card) compromised, because it's the same thing.
US does not always have those proper card safety features (you can use debit cards without pin and online use does not require pin) and banks will fight tooth and nail not to give back overdraft fees (as the overdraft would be from other transactions from the account after the fraud drains an account)
Would you be able to overdraft with a debit card, though? When I was the victim of card cloning, I discovered it in the supermarket when my card purchase didn't go through due to lack of funds.
When a card is stolen or cloned, it is usually discovered really fast. Either by the victim or by the bank. It's probably in most cases a matter of hours or even minutes.
yes, it is possible depending on timing (if a card is authorized but captured later in the day or the authorization was less than the capture, this is why gas pumps do auth for $100 and hold that for days till it clears), but the risk is more about expected/scheduled transactions hitting the account before you realize it got drained
I guess my bank accounts have never had an overdraft function. If there aren't sufficient funds in the account, the debit card transaction/withdrawal gets denied, no matter who is using or misusing the card.
If your debit card is stolen, your bank has to return all money that was used or withdrawn to you. Since it is unauthorized use of your funds. Same for credit cards of course. Such money is returned swiftly.
But the more concerning fraud is when you purchase something and don't receive what you should have received from the merchant. Whether it is due to outright fraud or not. In these cases you will also have your money reimbursed by your credit or debit card.
> If your debit card is stolen, your bank has to return all money that was used or withdrawn to you. Since it is unauthorized use of your funds. Same for credit cards of course. Such money is returned swiftly.
This may be what the letter of the law says but this isn't reality. Using debit puts you at greater financial risk.
“Using debit puts you at a greater financial risk.”
What how? Surely the US populations credit card debt dorf even the global populations debit card fraud numbers. So while my whole family in a combined 200 years of adulthood have indeed lost some 1000 euro total in fraud, it's not thing compared to the average Americans credit card bills.
I'd rather risk the street criminals with my debit than the suit wearing ones with their credit.
My debit card is a direct line to my primary bank account. If something goes wrong there and an attacker gains access, my cash is simply gone. Yes, the bank will perform an investigation and yes they may issue some provisional credits as a bridge, but there's a window of time between the theft and that investigation concluding where my actual cash is not in my account.
With a credit card, if the card is compromised, its not my money being stolen - its the card issuer's money from my line of credit, and they were planning on settling up with me when my monthly statement closes. I still have to launch a fraud case with the issuer, but critically, _all of my money is still in my bank account_ and I can continue to pay my other bills and obligations as normal.
I think its reasonable to consider giving up that buffer to be additional risk for the debit card approach, setting aside any other advantages or disadvantages between the two.
My debit card is a direct line to my primary bank account. If something goes wrong there and an attacker gains access, my cash is simply gone.
Your bank lacks proper security protections then. Here most banks have limits on debit card transactions. If you want to do a very large transaction, you have to increase the limit for a short time period in your banking app, and there is a delay of a few hours (they'll warn you when the spending limit is increased).
IANAL, but also consumer protection is much stronger in Europe. E.g. in NL if you stick to 5 basic rules, which are sensible things like not intentionally giving away your banking card or PIN code, the bank has to refund stolen money:
EU has much stronger consumer protection and it's on the banks to provide secure systems. Like if my card gets skimmed by an ATM or merchant the bank pays for the fraudulent charges. And overall the EU has much less card fraud.
That's what I said... but, that takes time, time for which you don't have access to that cash.
Just a quick Google... Wells Fargo's policy is 10 days to either case resolution OR provisional credit. I assume that's typical for American banks. For somebody living paycheck to paycheck, 10 days is a long time to go without access to what little cash they might have.
The protections aren't quite the same with merchant issues. Notably, most situations that you attempt in good faith to resolve, purchased within 100 miles of your home are protected for credit cards.
But even if it were - most people operate one checking account, and most folks don't keep an especially large balance. If your debit card gets compromised or there is an erroneous charge, it will process up to your balance. It is incumbent on you to notice the fraud and take action. If the bad dip is today, and tomorrow morning my mortgage and other payments bounce or hit overdraft, I have a mess to clean up.
With a credit card, you're typically hitting a larger credit line that isn't fully utilize -- you may not notice the bad charge for a month, but there's no impact to you... the thief stole the bank's money.
You guys use the debit card linked to your primary bank account??? There's been virtual cards for online shopping for 10+ years now. They're meant to be linked to an empty or low amount bank account. Now with Revolut you can schedule auto top-up to keep this low amount up to date.
Not to mention the per-purchase (online/in-person) limits, mandatory PIN entry, and daily maximums...
We don't use any cards for online shopping, what do you mean? In most European countries online shopping uses a payment API that takes you to your bank's payment portal where you can review the transaction amount before confirming. It's no longer the 20th century, we're not handing out any card details to online merchants.
Banking in the US feels like it's stuck in the 90s. Heck, half the time, it's not even chip+PIN, it's chip+signature (which is a relativelyrecent change from carbon copy or swipe and signature).
I've never had a web shop use an API to deduct from my bank account - the closest thing is PayPal, which as far as I can tell is basically ACH under the covers, just though an intermediary. Pretty sure more Americans use their CC or debit card for online shopping.
Of course all online merchants in Europe take card payment. Some of them also offer payment by bank payment portals, such as you've described. These have zero benefits for the customer.
Ah yes let me forego the chargeback protections (and convenience of one tap Apple Pay) to reduce merchants fee by 0.2% of transaction value, sounds great
We have virtual cards as well, maybe used it once. But we also have a lot less fraud and typically require 2fa for online purchases and chip+pin every x purchases.
I have always heard that the 2fa verification really depended on the vendor actually doing that auth so I always scrape the 3 verification number (what is it for anyways ?) at the back of my card. It's just 3 numbers after all.
It's mandatory by law, and it's additionally to the 3 numbers at the back of the card.
Usually it works by confirming or denying the transaction on the App of your Issuing bank
This is the law which regulates such things, and the law makes no difference between any payment service (ie credit or debit), when it comes to unauthorized use, see chapter 5:
You're linking to a completely different and irrelevant law regarding consumer credits.
The law 2018:175, which I previously linked to, is crystal clear and protects consumers against unauthorized use of their digital payment means, including but not limited to all types of card transactions. Otherwise, please let me know which chapter excludes debit cards.
Even bank transactions are protected by this law. And it has been all the way to the supreme court, which ruled in favour of the fraud victim against the bank. The victim had voluntarily handed over their digital banking credentials to scammers, and the bank refused to reimburse the stolen money. However, the supreme court ruled that the bank was indeed bound by law to reimburse the money:
But even so, if the law is not enough and if the supreme court ruling is not enough for you, then at least empirical evidence should be enough? Just ask around with family and friends and you'll find at least a few people who have been the victims of having their debit card stolen or cloned. They will let you know that the bank returned their money swiftly.
Others have said it but I will pile on as this is dangerous misinformation.
It’s sort of true in a legal sense, but not a practical one. If you find yourself in a dispute (even outright fraud sometimes) you might end up stuck for weeks or months with your disputed funds frozen.
If you are a highly paid software engineer with considerable assets and transaction volume at your bank it’s likely you will never experience hardship with disputing a transaction. If you are someone scraping by and that $200 depends on you paying rent on time that month you will find your experience to perhaps be different.
I’ve helped friends and family with such disputes in the past. Credit cards even when it “goes wrong” are much better to deal with. Your credit limit being reduced a bit is immaterial to your life most of the time. Having your own money tied up during an investigation that demands more and more paperwork like police reports etc. can be incredibly damaging and if nothing else quite stressful. The experience some of my friends had in these matters is nothing like I had when I had my wallet stolen and I no longer recommend anyone use debit if they can avoid it.
Heck, I had a friend who doesn’t even have a passport dispute an ATM transaction in a country he never visited. The bank initially denied it and it took weeks to eventually get it resolved in his favor.
In the end having the banks money tied up vs your own money at risk is always better if you can handle the responsibility of a credit card.
> Others have said it but I will pile on as this is dangerous misinformation.
Was that an introduction to the rest of your comment?
Explain to me please how a dispute with a vendor on a purchase makes a difference for your ability to pay rent? If the purchase was not fraud, then you have used that money anyway with your purchase. Unless you're planning to pay rent by bartering your Amazon order.
If you're instead talking about a stolen or cloned debit card, then that money is refunded usually as soon as you've made a police report and sent it to the bank, which is a matter of two days at most. The paperwork is not difficult, because cards get stolen and cloned all the time.
But the fraud protection is the same, even if procedures and timelines might differ.
> But the fraud protection is the same, even if procedures and timelines might differ.
I wrote about outright fraud taking weeks (in one case, months) to resolve. From my own personal direct experience.
> I had a friend who doesn’t even have a passport dispute an ATM transaction in a country he never visited.
Does this sound like a dispute with a vendor or outright fraud?
A dispute with a vendor can also mean an overcharge or something like a renewal fee for a yearly membership that is under dispute. It's not just marginal items you bought and the vendor refuses a return or it never shows up or whatever.
Like I said - if you are a highly paid professional you likely will never have a problem with this. It's an invisible part of the economy to you. If you are working class you are much more likely to have a wildly different experience. Banks have what is effectively an internal credit score system for each customer. For those with serious assets with the bank you get a lot more leeway and benefit of the doubt until you start abusing it.
Please spare me the "working class" appeals. You don't know anything about me, and I don't know anything about you.
I've had my own bank account emptied by card cloners. And the bank reimbursed the money swiftly after having made a police report. The same for everybody else I know who have fallen victim to the same. None of us with any kind of impressive assets when it happened.
As for disputes with vendors, sure, I give you that there is a difference in time frame when paying by credit instead of debit.
A cloned or stolen card should never take weeks or months to resolve. In that case, you've been the victim of a criminal bank. It's not the experience for most victims, whether rich or poor.
