|by Jason Steele|
It is not my job to promote credit cards. Regular readers of this column know that I have been highly critical of the credit card industry in the past. That said, using a credit card is still highly advantageous. Just when I thought that I knew all of the reasons that credit card use is better than cash, today I learned a couple new ones.
Until now, I really just thought that this was the domain of crime movies and Russian gangsters. Then, a friend of mine told me the story of how he received a counterfeit twenty dollar bill from an ATM. A bank employee identified the bill and confiscated it. He wisely asked for some documentation from the bank and is going to try to get some compensation from the bank that owned the ATM.
Needless to say, it is inherently impossible to have that problem when using credit cards. Nevertheless, it is interesting to note that it is actually the United States Secret Service that is authorized to investigate counterfeiting. They are actually a division of the Treasury, and their currency work pre-dates their function as a protective service for the President. Here is their website that explains how to detect counterfeit currency.
Downsides Of Debit
I have never been a big fan of debit cards. I tell people to never, ever use them when purchasing hotel accommodations, renting a car, or ing airline tickets. Hotels and rental cars will freeze a large sum of your cash beyond the length of your rental/hotel stay. Airlines, on the other hand, may or may not cancel your flight or go out of business entirely, leaving you with little or no recourse. In the event of a cancellation, you will likely be stuck in endless airline bureaucracy and delays trying to get your money back. If you used a credit card instead of a debit card, you could threaten a chargeback for services not delivered. That threat is very powerful as it will trigger higher merchant fees on all transactions for that company. The threat of a chargeback does just wonders in cutting through the red tape that has been intentionally constructed around all refunds.
In the event that the airline goes out of business, you will not be able to do a chargeback on your debit card, and will literally have to go to bankruptcy court to have any chance of receiving just pennies on the dollar for your money. If you think it can’t happen, think of Pan AM, Eastern Airlines, or any one of these airlines that went out of business when oil prices spiked in 2008.
Some people feel a lot more comfortable with debit cards. They know that they will never have to worry about incurring interest as the money is taken out of their account at the time of purchase. That is fine, but they do need to realize that the transaction is just about as permanent as handing someone cash. So long as you initially authorize the transaction, you have little outside recourse if the company fails to deliver the product or service. With debit cards, your protection is only in cases of theft or outright fraud, there are no chargebacks for non-delivery of products or services.