Category Archive: Debit Cards

Reduce Credit Card Use

According to this recent L.A. Times report

Consumer borrowing increased at an annual rate of 10% in November,the largest jump in a decade… 

Outstanding credit card debt increased 8.5% in November… (emphasis, mine)

It appears that folks are using credit cards more than ever – and outstanding balances are increasing.

For more than seven years, here’s how I have reduced (and almost eliminated) my use of a credit card:

I live on a budget.

If we eliminate unplanned-for spending, we can eliminate unplanned-for borrowing.  At the beginning of the month, I know how much money I am going to spend and I know where I am going to spend it.  Some portion of credit card use results from poor planning.  Eliminate the poor planning, and we eliminate this type of credit card use.  I use a zero-based budget to manage our household finances and an irregular income budget to manage business finances.

I use online banking to pay monthly bills.

Instead of charging my bills to a credit card, I simply pay (the majority of) my bills from my online bank account.

I pay cash for everyday purchases.

I have mentioned it before, but it bears repeating.  I use the envelope system to manage my cash.  It works and is simple to use.  Again, if the goal is to reduce credit card use, the envelope system is a great tool.

I use a credit card only for reservations, not for payment.

I have used a credit card, on many occasions, to reserve a hotel room.  At the end of my stay, I pay with either cash or debit card.

I still write paper checks.

Yes, I know that I am a Luddite, but I will occasionally write a real, old fashioned, paper check.  I will do this when I give offering at church or when I need proof-of-payment for daycare or some other service.

I use a debit card when necessary.

There are some purchases (think online shopping) that really do call for either a debit or credit card.  Rather than worry about identity theft, and the loss of all of the money in my checking account, I have a dedicated secondary checking account, attached to my debit card, and I use that account for all online purchases.  When I create my budget, I allocate necessary funds to the secondary checking account and use the debit card for online purchases.  It’s not much of a hassle, and it eliminates the unnecessary temptation to use my credit card.

If I had to use a credit card –

I would only use a credit card to pay for budgeted items.

I would pay a credit card off – each month – in full.

I would refuse to use the card, simply to get a discount, points, or a reward.

I would consider the potential long-term impact of my short-term decisions.

When I combine the use of online bill pay, a debit card for online purchases, and cash for everyday purchases, there’s not a whole lot of room left for the use of a credit card.  Instead, things are simple to manage and I don’t have to add to any increase in those statistics.

Credit cards aren’t evil.  They’re neither good nor bad.  They do, however, provide an ease-of-use that can quickly wreck a budget.  I stick to my system, keep things simple, and rock on.

One side note:  I am glad to see that certain credit cards are beginning to offer longer-term zero-percent interest deals.  We used one of these deals when paying off our debt, and it significantly reduced our overall interest charges.

One final note: I do have a couple of credit cards, but I rarely use them.  Once every few months, I’ll charge a tank of gas or buy some groceries, and then pay the thing off.  I do this simply to have some limited activity on the cards.  I have monitored my credit score for several years and everything looks just fine.  There was a time when I was staunchly anti-use-of-credit card (and, I still think the world would be just fine without them), but now I’m more anti-over-use-of-credit card.  I’ve mellowed a bit in my old age.  The key is to be informed and responsible.  Rock on!

Continue Reading

Break The Credit Card Cycle

It has been several years since my wife and I regularly used credit cards for monthly purchases.  Instead, we use cash, debit cards, and online bill pay.  Here’s how we broke our credit card cycle –

1.  We put our credit cards in our wallets – and just left them there.  We didn’t cut them up.  We didn’t cancel them.  We didn’t put them in the freezer.  We simply made a decision not to use them on a regular basis.  Over the past six years, this has served us well.

2.  Before we started living on a budget and getting out of debt, our credit card served as our emergency fund.  If we were a few hundred dollars short at the end of the month (due to real needs and / or just wants), we would use our credit card.  The first thing we did, when getting out of debt, was establish a real emergency fund.  Obviously, no fund is big enough to cover every-single-emergency-imaginable, but we had to start somewhere.  Our goal, in those early years, was to keep between $1000 and $2000 in our emergency fund, at all times.

3.  We live on a budget and created a structure for managing our daily and monthly spending.  Click link to see yesterday’s article on this subject.

4.  We use the envelope system – which really helps to keep cash spending down, keep things organized, and promote smart shopping.  There was a time when, if I had cash in my pocket, I would spend it.  If I had $5, I would spend $5.  If I had $100, I would spend $100.  However, once I made the promise to myself that I was “done” with credit cards – I had to get serious about proper cash management.  Without the safety net of the credit card (and with no desire to constantly dip into our emergency fund) we quickly learned to be smarter with our cash.

5.  We routinely use our debit card “like” a credit card.  I use it online and I’ve even used my debit card to reserve a rental car.  A bit concerned about using our debit card for online purchases, I opened an Electric Orange℠ checking account from ING DIRECT.  (Right now, ING is offering a $50 bonus if you sign up for their Electric Orange checking.)  We keep a limited amount of money in the account, separate from our primary checking account, and use the Electric Orange account for all online purchases.  This works well for us – but we do have to be careful.  It’s easy to overspend when simply swiping a card or punching in those 16 digits, credit or debit.

6.  We ignore bonuses, rewards, and discounts associated with credit card use.  I’ll admit it:  It can be difficult ignoring all of the “extras” associated with credit card use.  However, for us, we would rather focus on zerothat’s the amount we owe credit card companies – than on the 5% discount or 2% cash back we might receive.  Sure, the “extras” would be nice, but we’re doing just fine.

That’s how we broke our credit card habit.  If we chose to do so, we could start using our credit cards again.  We do a much better job of managing our finances than we used to do.  I’m sure we could use them without a hitch, but we’re going to keep doing what’s been working.  Our system works just fine for us.  However, if we were to use credit cards again, we would simply use them and pay them off at the end of the month.  The focus of this article is not on abandoning credit card use, forever, but on how we broke the cycle of over-using them, and having to pay interest and fees.

 

Continue Reading

Can I Rent A Car Without A Credit Card?

Can I rent a car without a credit card?  What if I need to rent an automobile but I want to use a debit card or cash?  I did a bit of research and have linked to various car rental services and their policies.  Information updated November 22, 2016.

This information is provided in summary form and you should conduct your own research before using any of the companies listed.  Information is subject to change at anytime.  (Emphasis added)

Hertz: The Hertz website states:

Q: Can I use my Debit Card or Bank Card to reserve a Hertz car?

A: At most Hertz locations, debit cards (sometimes called check cards) issued under a VISA or Mastercard logo which draw funds directly from the cardholder’s account may be used to qualify for rental. However, prepaid or stored value cards which have a VISA or Mastercard logo are not accepted to qualify for rental. Debit cards must have available funds for the estimated amount of the rental charges plus a reasonable amount to cover any incidental charges in order to secure the rental. Both debit cards and prepaid or stored value cards issued under a VISA or Mastercard logo may be used as a form of payment when you return the vehicle. Please contact your local Hertz Reservations Office if you have a question about whether Hertz will accept a certain card.

Enterprise: The Enterprise website states:

Some Enterprise Rent-A-Car locations may accept debit cards, pre-paid cards, or other forms of payment to secure the rental transaction. To reserve a vehicle without a major credit card, please contact the local office directly. Click here for location information

At the time of rental, a debit card must be presented with available credit, in the renter’s name. In addition to the anticipated cost of the rental, an additional security deposit may be required. To find out the cost of the security deposit, you will need to contact the location directly.

The signature on the back must match the name imprinted on the card and the signature on the rental agreement.

At the end of the rental, if you are entitled to a refund, the location will release the funds immediately. Due to bank processing times, this could be delayed a couple days, but we find that typically customers have their refund within 15 business days.

keys-233368_1280

Avis: The Avis Website states

Most U.S. locations accept bank debit cards with the Visa or MasterCard logo as credit identification at the time of rental if you are at least 25 years of age. In most cases, U.S. locations will perform a credit check for debit card renters to determine credit worthiness at the time of rental. The renter must meet Avis’ minimum criteria in order to rent. Currently, at all U.S. and Canada locations, debit cards are not acceptable as credit identification at the time of rental for all makes and models identified in the Avis Signature Series and for certain other premium vehicles. Debit cards are also not acceptable as credit identification at the time of rental at locations in the Metropolitan NY Tri-State area, Hartford, CT, Philadelphia area, Mississippi or Louisiana locations as well as other locations across the country. Canada locations do not accept bank debit cards as a form of credit identification. Debit Cards are acceptable for payment at the completion of your rental.

Also be advised that some Avis locations do not accept debit cards as a form of payment. Upon paying your rental with a Debit Card, Avis will generally request an authorization hold against your account for the estimated charges of the rental but reserves the right in its sole discretion to request extra value based on certain factors as we deem appropriate. Some exceptions may apply. THESE FUNDS WILL NOT BE AVAILABLE FOR YOUR USE. When the rental is over we will process the reversal but the bank may take time to post it back to the account.

If you fail to return the vehicle as agreed, Avis will obtain additional authorizations from your account to cover the rental charges.

Avis is not responsible for any returned checks or over-drafts based on this policy.

This policy applies to both U.S. residents and foreign renters. Positive identification in addition to your driver’s license may be required.

In the United States, debit, cash or check cards can be used at the end of the rental for payment of rental charges. For acceptable credit identification and payment methods in countries outside of the U.S., please search for the specific location’s Terms and Conditions.

Budget: The Budget website states:

Which credit, charge and debit cards do you accept?

Answer:  Our corporate-operated locations accept the following major credit cards: American Express, Budget Charge Card, Budget International, Discover, JCB/Japan Card, MasterCard, Optima, PHH and Visa. Please note that acceptance of these cards may vary at locations outside of the U.S. and at our licensee-owned locations.

At some locations, debit and pre-paid charge cards are not accepted at rental pick-up time, but are accepted for payment at time of car return. See What kinds of credentials will I need to present when I pick up my rental? for information on required rental pick-up holds.

From the National Website

Debit/check cards are considered to be any non-credit card bearing the VISA, MasterCard or Discover Card logo. Any other non-credit card without the VISA, MasterCard or Discover Card logo is not accepted.

When renting in the US, a credit card in the name of the renter must be presented at the time of rental; otherwise, Debit/Check cards are accepted along with proof of a confirmed round trip travel ticket (airline, cruise ship or train). Without proof of roundtrip ticket, debit or check cards are only accepted as a form of payment at time of return.

Puerto Rico, a credit card in the name of the renter must be presented at the time of rental. Debit/check cards are only accepted for payment at time of return.

In Canada, US bank issued Debit/Check cards are accepted as a form of payment at return provided they DO NOT require a Personnel Identification Number (PIN).

Canadian bank issued Debit/Check cards that require the use of a PIN are NOT accepted as a form of payment.

Canada, a credit card in the name of the renter must be presented at the time of rental.

Summary:

Almost every major rental car agency WILL allow you to reserve a car using a debit card. Most, however, will place a “hold” on your debit card in the amount of the full rental price plus, in some cases, a pretty healthy deposit percentage. Some rental agencies do not accept debit cards for reservation or have very strict policies. As for PAYMENT, however, almost ALL of the companies WILL accept a debit card as a method of payment when you RETURN the automobile. So, for now, perhaps the best way to rent a car is to either:

A) Reserve the car with a company that allows you to use a debit card. If yo do this, be sure that you have sufficient money in the bank to cover the entire rental fee and a rental ‘hold’ that the rental agency will no doubt place on your card.

B) RESERVE the car using your credit card and PAY for the car rental using cash or your debit card.

As I’ve stated before, I did not cut up my credit cards, and I carry one with me wherever I go. If pressed, for the safety and security of my family, I would use a credit card to reserve a rental car and pay cash whenever I returned the car.

Again, before you use one of the above mentioned rental agencies, please research their current policies. Also, while I was compiling this information, I did not take into account ANY insurance-related policies. Please do your own research before you rent a car. An informed consumer is a powerful consumer!

Summary:

Almost every major rental car agency WILL rent a car without a credit card.  Most, however, will place a “hold” on your debit card for the full rental price, plus, in most cases, an added deposit.

When it comes to payment, most will accept a debit card as payment when you return the automobile.  Available options appear to be:

A) Reserve the car with a company that allows you to use a debit card.  If you do this, be sure that you bank account has a sufficient amount to cover the deposit, the hold, and any other charges that you might incur.

B) RESERVE the car using your credit card and PAY for the car rental using cash or your debit card.

While I do not use a credit card to make purchases, I do carry one in my wallet.  If necessary, for the security of my family, I would use the credit card to reserve a car and then pay cash for the rental when I returned the car.

Before renting an automobile, understand a company’s policies.  Do your own research and call ahead if you have questions.  While I was compiling this information, I did not take into account ANY insurance-related policies.

Please consider subscribing to No Credit Needed via email or rss – and follow me on twitter.com/NCN and facebook.com/NoCreditNeeded to keep up with my progress.  I’d love to hear from you via social media or here in the comments.  Have a blessed day!

Continue Reading
View My Stats