Financial Feminist - 69. I Don't Have a Debit Card

Episode Date: February 2, 2023

If you’ve been influenced by the D*ve R*mseys of the world to believe that credit cards are evil, you might be missing out on one of the best money tools. Like any tool, knowing how to use it properly is the key. Today, Tori sits down to share why she’s never used a debit card and instead pays her way through life on credit cards –– earning rewards and points WITHOUT going into debt.  Not sure which card is right for you? We have recommendations for everyone at www.herfirst100k.com/tools Learn more, read transcripts, and get additional resources on our show notes page: www.financialfeministpodcast.com Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hello, Financial Feminists. A quick announcement. We are taking next week off. We are taking a company-wide break because mental health is important. And also, we just wrote and edited and released a book, and things have been a little crazy. So not only the podcast, but Her First 100K socials, we're just not going to see you for a week. And we hope that in the meantime, you go read the book, Financial Feminists. You go to our back catalog. You go to literally our thousands of hours of free content on our website, Her First 100K, but just a quick heads up that we will drop in your feeds in two weeks. Thanks for being here. Hello, Financial Feminists. Welcome back to the show. If you are new to the show,

maybe you discovered us through our book, Financial Feminists. Welcome. We have an entire back catalog of episodes that you can om nom nom on to your heart's content. And if you're an oldie but a goodie, welcome back. We're so excited that you are committed to getting your financial shit together in 2023 and committed to bettering the world. We also have a Financial Feminist Podcast Instagram, where we share clips from the show, tips and tricks at Financial Feminist Podcast. And of course, our main account is at herfirst100k. If you haven't purchased a copy of Financial Feminist, it is available wherever you get your books, your local bookstore, but also Barnes & Noble and Amazon and Walmart. And it will be available in Target stores physically very shortly, which is exciting. So support your local independent bookstore

and go to the library if you can't afford a $22 copy right now. Okay, today we are talking about one of the questions I get asked a lot, which is why I don't use a debit card. How I survive and thrive without using a debit card. Yes, you heard that correctly. I don't use a debit card ever. I have never put anything on a debit card. Period. Get a ton of questions from the audience on why this is, what I do instead of using a debit card, and especially if you're from a he who must not be named Dave Ramsey background, why it's actually okay to use a credit card and why credit cards are not the devil. I'm going to get this right out of the way off the bat.

If you are currently in credit card debt, as in you owe more on your credit card than you were able to pay off, right? You have not paid the full balance on your credit card, then yes, thousand percent okay to use a debit card. It's okay to use a debit card for anybody. I'm just telling you why for me it made more sense to use a credit card. However, if you do not have the best relationship with credit cards at this point in time, one, this podcast is here to help you better that relationship. We have multiple tips and tricks in the book Financial Feminist about

how to improve your relationship with credit cards. But this is not a strategy if you are already in credit card debt and you're like, I don't feel like I can fully trust myself right now. We have several debt resources, including multiple episodes from the back catalog on debt, and also a course called Debt Defeater that can help you navigate how to pay off your credit cards and get to a place with your finances where you're not overspending. And if this is you, it's still a great episode to listen to because it can show you how to use a money tool like a credit card on the other side. We have an entire chapter about debt in Financial Feminist as well. Okay, we're going to go through

the reasons I prefer credit cards and then I'll walk you through how I use said credit cards without going into debt. Number one, debit cards are not as secure as credit cards. I know we don't love thinking about like worst case scenarios, but when it comes to money, we need to be safe than sorry. And unfortunately, losing your wallet or getting your card info is caught in a scam is way more common than we'd like. So if theft were to occur, someone has direct access to your bank account and everything in it. Now, you do have some sort of like pin protection, right? But it's much harder to prove fraud with a debit card. And it's much more debilitating should something terrible happen. If fraud occurs on my credit card,

which it did literally like a couple months ago, I got a charge for like it was some sort of shoe store. And I was like, I didn't go in and buy a pair of like Air Jordans for $100, $500. That was not me. I simply dispute it with my credit card company. So if I see any suspicious activity, I simply flag it and then I let the company handle it. And because it's not directly connected to my bank account, they don't have access to my cash. So that's reason number one. It's more secure and also it's more hands-off if something does happen. I don't have to worry about it. They're going to handle it. Number two, credit cards usually don't come with points or cashback rewards, or at least as good of rewards as credit cards. I'll talk about more of this in the latter part of this episode, but everything I buy,

I put on a credit card. And then I just pay it off in full. So all of my bills, my groceries, my fun purchases. We also have a separate credit card for the business. So every time I have a business expense, if I need to go out to... Need to go out. If I need to go out to a fancy lunch, I can put it on a credit card. If we're paying for our email subscription service that costs something like $25,000, then we'll put that on the credit card. So it helps us rack up these really big cashback and travel rewards. So both through travel and through my credit card, I've managed to build up. It's something like, I haven't even looked recently, 600, 700,000 points. And I get hundreds of dollars a year in cash with my favorite cashback

card on the things I'm already buying. We have all of our recommendations at herfirst100k.com slash tools, and we'll link it down below too. Our producer Kristen was sharing with me earlier that she and her husband use their cashback every year to celebrate their anniversary completely on points. And one of our former guests, Chelsea Devontes, uses her points to buy gift cards, and then she gives back to her favorite charitable organizations. So there's so many ways to build points, to get cash back, to get free travel,

and debit cards are just not going to give you those same rewards that a credit card will. all right number three building credit is so important to being financially confident and financially free a great credit score is like your adulting gpa right we've talked about this before we have a previous episode about how to increase your credit score and one of the ways to increase it is by using a credit card responsibly. So paying your bills on time and in full, using a small amount of your credit limit. So you can begin to increase your credit score and set yourself up for better financial opportunities. Because if you want to buy a house someday, you need a credit score. You even want a platinum or a premium credit card, you need a good credit score. Sometimes you want to go and get an apartment, they'll often ask for your credit score. You want to buy a car, you need

a credit score, right? So the best thing we can do is build our credit and increase our credit score by using credit cards responsibly. There is a fantastic conversation in our back catalog with Vrinda Gupta on episode 18, where we talk about building your credit score, right? Exactly what the myths are that keep you from growing it. So I got my first credit card when I was a teenager, right? And because of using it strategically, I was able to get a very low rate on my first car loan. And if I do go buy a house, I'll have a score that will help me get a better rate on my mortgage. And being a responsible credit card user is one of the easiest ways to increase your credit score. Number four, tracking purchases is easier on a credit card because they categorize your spending

for you. I have been tagged in multiple TikToks recently where they have, users have been doing what they call their chase wrapped and it's like Spotify wrapped, but they just like are, you know, the green screen there in front of how much they've spent money, and then they just reveal it. And then they're usually like, you know, throwing up emoji. But it's actually a really good way to see how much you've spent your money on, right? And where the money's gone. It's so much easier to track and understand your spending. When you see it all broken down on a credit card statement, either every month or, you know, every year, there is little to no cash in the equation. So I can see exactly where and when my money went.

And I can analyze where I should cut back and any spending wins I had for the month. And if you love a by-hand budget, do a by-hand budget. But credit cards usually have the tools that break it down for you and break down your spending by category. So it's easy to see if you're in budget or if you're out of budget or, oh, I spent too much money on that thing I didn't really love. We've talked about value-based spending so much on this podcast and then the book. So it's a nice little like, yeah, let's call it the Spotify wrapped of your spending. And it really helps you make more strategic decisions in an easy-to-use way. I would also say as like, you know, 4.5 on this, I have this weird thing that when I get cash,

it's not real money. Like, I don't know. In my head, like when I get cash on the very rare occasions where I do have cash, I am very willy-nilly with it because I'm like, it's not real money. I don't know why I think that. I think that's very common. I know some people have this weirdly with credit cards of like cash is physical and tangible, but I'll just swipe a credit card and it's nothing. But for me, weirdly, it's the other way around where it's like, if I have cash, that's not real money. I could just spend it like crazy. Oh, yeah. You want a crazy, crazy thing? Here you go. Here's some cash for it. So that's the other thing. It could just spend it like crazy. Oh, yeah. You want a crazy, crazy thing? Here you go.

Here's some cash for it. So that's the other thing. It's just like putting everything on a credit card helps me tangibly see, oh, I spent money on that thing because it's like I get a report card later, right? No one's like yelling at me two weeks later and telling me how much cash I gave them. All right. Last but not least, I don't really need one. My parents never had a debit card, I know, and instilled this in me. So if I need cash on the very rare occasion I need cash, and it's usually for a trip just so I have some money in cash should I need it, I just go to the bank. I go to the bank and I withdraw money from my account, right? Or I set up a transfer from my high-yield savings account to make sure I have the money.

or I set up a transfer from my high-yield savings account to make sure I have the money. 95% of businesses take credit cards anyway. And it's also more secure because I don't want to be a woman walking around with multiple hundos in her purse all the time. Just this is the classic personal finance advice, again, that doesn't take into account people's realities, which is like, it's not safe for me as a woman. And it's especially not safe for me as a woman with a bunch of money in my purse. So credit cards are just easier. They're easier. And I don't really need cash all that often. And when I do, I can typically plan for it in advance. All right. The one downside is sometimes you do just need cash. Sometimes you do need cash. And when a bank is closed or if you own the online bank, it's really complicated to withdraw your money. So in this case, you could keep a debit card, but just keep it in a drawer, right? Which is kind of what I do

now because I signed up for SoFi, shameless plug, and they give me a debit card and I just, I won't use it. So it's in a drawer. It's in a drawer somewhere, right? So now that we've gone over the why I do this, here's the how. I'll once again repeat, if you are prone to overspending or you already have credit card debt you're paying off, this is probably not the right tactic for you. There are many ways to build credit. And if putting all of your expenses on a credit card doesn't feel responsible for you, then don't. Personal finance is personal. Kristen, who's our producer, wrote a blog post about paying off $25,000 of debt, which hell yes, Kristen. And a good chunk

of that was credit card debt. And so she is now using a credit card for all of her expenses, but worked up to this slowly. So starting with just putting gas on a credit card and then paying it off immediately. So slowly, she then started adding more things. So then in addition to gas, it was like groceries and then going out to eat. So after about two years of proving to herself that she wouldn't go back into debt, she and her husband started using this more regularly. So that might be a good solution for you if you want to just move in a little slowly, dip your toe in the water. Okay. So here's what I do. I put everything on a credit card, everything. And then I pay it off in full at the end of the month or biweekly or whatever you want to do. Right. If a credit card bill is due on the 15th. Right. I have an automatic payment go out on the

14th that takes all of the money out of my checking account. Right. So if I put $3,000 on a credit card, even if the minimum payment is like $400, I am still paying $3,000 because if you keep a balance on the credit card past the 15th, which is the due date, it is now considered debt. But it doesn't have to be more complicated than that. So what this does for me is make sure that none of the charges are hit with interest. It's not actually debt unless it's overdue. That's the other thing of credit cards. Quick aside is people think like, oh, if I have money on it, like if I put a charge on a credit card, it is debt. It is not really debt until they start charging you interest, which is the day after it was due, right? So I'm putting all of my bills on

a credit card and I'm just acting like it's a debit card. If I don't have the money to pay for it, I'm not putting it on the credit card. So even if the amount shows up in the statement, it's not on my account. It's not overdue. So then it's not charging me interest. What's really important though, when you're using this method is having a solid understanding of your budget, which is why there's an entire chapter in my book, Financial Feminist, which I will, of course, be plugging forever because budgeting is important. And budgeting doesn't mean you want to die, right? Budgeting doesn't mean restriction. Instead, it's having a general understanding of where your money is going and why. So if you start using this method, you need

to make sure you're having your monthly money date with yourself, right? Using those categorization tools to see if you're staying within your budget. And if you're constantly going over, start using your debit card for a while. See if you're still overspending in specific areas, right? Again, this is an incredible tool, but only if you're using your credit cards as debit cards. That's it. You're not putting purchases on a card that you can't afford. They are not evil. Credit cards are not evil. I joke that they're just like any other tool, right? They're like a knife. Knives can cut you. Yeah, they can slice your finger, but they can also make you a very yummy veggie stir fry, right? And so as long as you use it responsibly, it is an incredible tool for you to be able to not only be more strategic with your spending, but to also get points and cash back.

I literally am planning a trip right now that I will take entirely for free using those credit card points. The flight, the hotel, even like the airport lounge access that I'm getting on said flight. This will all be for free. We'll make sure to put more resources about credit cards. We'll link our favorite credit cards for travel or for cashback or for business owners or for just beginners or students down below. And we'll also put them in the show notes page. Thank you again for joining us on this episode of Financial Feminist. And you can leave us a voicemail. I always want to highlight that. If you have a question, comment,

concern, you can leave us a voicemail., topic requests, or even like big money wins. Those are my favorite. You can leave us a voicemail at speakpipe.com slash financial feminist. Thank you for being here as always. We appreciate you and we'll see you next week. Financial feminist. Take care. Thank you for listening to financial feminist, a her first hundred K podcast. Financial feminist is hosted by me, Tori Dunlap, produced by Kristen Fields, marketing and administration by Karina Patel, Sharice Wade, Alina Helzer, Paulina Isaac, Sophia Cohen, Valerie Oresko, Jack Koning, Khalil Dumas, Elizabeth McCumber, Beth Bowen, and Amanda LeFew. Research byielle Johnson, audio engineering by Austin Fields,

promotional graphics by Mary Stratton, photography by Sarah Wolf, and theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100K team and community for supporting the show. For more information about Financial Feminist, Her First 100K, our guests, and episode show notes, visit financialfeministpodcast.com or follow us on Instagram at financialfeministpodcast.