If you have money in your bank account, you can swipe your card at the store and get stuff. If you have available credit, you can swipe your card at the store and get stuff. These are both money.
In the second case you may have borrowed the money and are then expected to pay it back later, but in general this is the method to be avoided unless you have a need for it, because borrowing money incurs fees/interest charges (whether directly or indirectly).
Unless if you only have enough available credit for a couple of purchases (e.g. maybe your first credit card or bad credit credit card), this distinction is pointless. Almost no fraud will touch the thousands of dollars of available credit, especially if on different or multiple cards.
Losing some available credit is not even a nuisance for most people who have any semblance of decent credit history.
Regardless, your last paragraph is also wrong. If the price is same when using a debit or credit card, it's better to use the credit card. You can keep the money in your account (and could be used in event of emergencies) and also earn interest until statement due date. There are no fees or interest when you pay your statement balance in full every month, which means you've gained 5% interest for about a month's worth of credit spending in your HYSA for the same price.
That second paragraph is just as wrong as yours. You're both right in some cases. The average American has several thousand dollars of credit card debt [1]. They are paying interest.
Check those numbers. I looked at the original data, and it seems that in the report you linked, debt is defined as a credit card balance.
I don't know about others, but I always float thousands on my balance and pay it off by the end of the month; the payment is all automatic. Often, for large sums, I pay it off online right away when I get home.
In my opinion, this is not debt—as long as you have the money, don't overspend, and pay it off within the grace period of 30 days, as long you are using the credit card as an intermediary for convenience and as a service that gives you various protections. There is benefit to the customer.
Stepping back, I think this is getting silly. The upstream comment stated to prefer cash over credit to avoid fees. You called that wrong and state there is a benefit to using credit. My claim is that you are equally wrong if the first person is wrong because interest and fees are often payed (data in peer comment)
If someone has cash, and is using credit to float the amount monthly, is there even really a distinction? If so, then the first commenters second paragraph could be amended to state to prefer credit only if you have the cash. Which is exactly what you are arguing.
I chafe at this thread since you are eager to call others wrong while actually arguing the same thing in the end.
That there is a benefit, can be a benefit to CC users is not in dispute. Meanwhile, the implications and practical effects of a duopoly are the interesting things. Notably, fir example, all prices being 3% higher. Yes that can be offset by cashback rewards, but sometimes is not and is certainly not when paying cash.
I am not calling others wrong, I am calling the definition incorrect.
A credit card balance during the grace period is not a debt - it is no different than paying by check - it is not more than a delay between a purchase being reflected on an account. That's all.
Only the balance after the grace period should be counted as a debt if we are using that term to talk about a population being more or less indebted than say X number of years ago etc.
A credit card balance is simply a form of bank account for large number of people.
> I am not calling others wrong, I am calling the definition incorrect.
Yet you wrote: "Regardless, your last paragraph is also wrong". The last paragraph was stated borrowing money was to be avoided. Nothing about debt vs balance.
> A credit card balance during the grace period is not a debt
This conflates "long term debt" with "short term debt." Debt generically refers to current debt, which might be short term or long term.
Second, by way of counter example, imagine a Credit card with a $100k balance. Your net assets are zero, and income are zero - if you max out that card - you have $100k of debt. Go to a creditor, tell them that $100k balance is actually zero debt because you have yet to repay it and have yet to pay any interest. I suspect you would be laughed at or charged with fraud. That $100k balance is not $0 in debt. Income actually does not matter to that statement. It would only matter if you qualify it as long term or short term debt. This is exactly why creditors often look at debt to income ratio, and not just absolute debt.
> Only the balance after the grace period should be counted as a debt if we are using that term to talk about a population being more or less indebted than say X number of years ago etc.
I agree that would give a more accurate picture of long term debt. Though, most redit card debt does represent long term debt. It must because the average balance exceeds the average income.
> A credit card balance is simply a form of bank account for large number of people
Indeed, but a large number is also small fraction of a giant number.
Let's step back. The second paragraph you said was wrong stated to essentially avoid borrowing money. You said (paraphrasing) "nuh-uh, credit is good for floating money." My retort is while that can be the case, for the majority of Americans credit cards are borrowing money. For a sizable and privileged minority, it is a way to purely float a balance. To then argue because of that, credit cards are a net good for the majority of people seems very flawed. That is further predicated that the interchange fees that are always payed are also always offset by credit card rewards programs. The predicate is flawed, and the assertion that for a majority credit is good because it just floats money is not supported by the data.
Credit card debt and credit card balance are the same thing.
> I don't know about others, but I always float thousands on my balance
This is the operative part. People on this forum tend to be in tech, and floating thousands is possible. A quick google search showed average US income is 60k/yr. Less 10k for taxes, less 20k for housing, that allows a float of less than 3k per year. The source previously stated an average debt of 6k, which is a balance more then the monthly income, and ergo is being carried over.
Looking for more direct data on how many Americans are paying credit card interest, I found this data:
"Half of credit cardholders surveyed in June (2024) as part of Bankrate's latest Credit Card Debt Survey said they carry balances over month to month. That is up from 44% in January – and the highest since since March 2020, when 60% of people carried debt from month to month" [1]
I thereby stand by my statement that your second paragraph was equally wrong (and equally right) as the second paragraph you were calling wrong.
Credit card debt and credit card balance aren’t the same thing, in practice.
If I had long standing debt on a credit card, I’d be paying an extremely high interest rate on that debt even with a >800 credit score.
If I have a balance that’s completely paid every month, I pay no interest on that “debt”. And while that money is floating, it’s in a 4.5% high yield savings account (Sallie Mae).
In the former situation, I am losing money. In the later, I’m making money. (Compared to paying with cash / debit).
In what percentage of total cases and to what fraction of the total balance? Please bring citations. This strikes me as a very glib, noisy, and unsupported claim.
> Credit card debt and credit card balance aren’t the same thing, in practice.
In practice, but pedanticatically speaking they are the same. If I asked, how much credit card debt do you have, you shouldn't say zero just because you likely will pay off the balance before the grace period expires.
EG:What is the balance on your mortgage? How much mortgage debt do you have? (The latter implies across all mortgages. That is the extent to which there is a distinction)
Pedantics and straw-manning aside, the main point, supported by citations - is that most americans are not paying their credit cards off, in full, every month.
This subthread is about fraud. If someone steals your debit card the money is gone from your bank account until the dispute resolution has happened. In contrast, if someone steals your credit card you dispute the transactions and until it's resolved you just have a lower available credit. But the point is you had money in your bank account anyway and were just paying with the credit card for the fraud and/or rewards reasons and that money is still there.
A debit card with 100$ on it can only be frauded to 0$.
A credit card with 100$ on it can be frauded to -10'000$ or whatever the limit is. You think a fraud will stop before reaching the limit?
If you have a debit card with no money, but a regular income, the bank will be happy to issue a new credit card to you. Where I live (EU), I can request it via internet banking and it takes ~3 days until the card arrives in the mail. Virtual cards are available immediately.
> You think a fraud will stop before reaching the limit?
Yes. Credit card issuers block transactions they believe are fraudulent. Being liable for fraud motivates them strongly.
Anecdotally I've had a couple of credit cards compromised in my life. On each occasion the thief got less than a couple hundred dollars before being detected.
A thief will usually try a couple smaller transactions first to see if the card is good. Large unusual transactions get flagged for review quickly.
> Credit card issuers block transactions they believe are fraudulent.
They do? I never had a CC and I don't know if that's the case where I live.
Maybe I'm being paranoid, but I don't trust banks: I don't trust them blocking fraud transactions, and if they do, then I wouldn't trust them to not block my transactions and leave me stranded on vacation somewhere, and finally I don't trust them to revert fraud transactions if they ever happen.
> I wouldn't trust them to not block my transactions and leave me stranded on vacation somewhere
I have multiple credit cards. And a debit card, and cash. It's advisable to notify the credit card company if you plan to travel. Most card websites and apps have a feature for this.
> I don't trust them to revert fraud transactions if they ever happen.
This might be a European thing. In the US credit card issuers are liable for any fraudulent transactions by law.
One of those involves me not having money. One does not.