Hacker News Reader

Comment by gruez | Hacker News Reader

Having chip/pin is orthogonal to the card being a credit or debit card. If anything, at least in the US a credit card has better protections in the event you are defrauded. If a fraudster drains your debit card, your money will be gone until they reverse the charges which can be days or weeks. In the meantime you won't be able to pay your bills or your rent, which can cause you to rack up late fees. On the other hand, if a fraudster drains your credit card, they stole your bank's money, not your money. The money is still in your account.

View on HN

I have never used a credit card when living in Europe, it was a debit card... but it is effectively debited at the end of the month only. So you have to pay in full at the end of the month. And the bank is responsible for the security on the card, so if it is hacked somehow, the bank has to fix/pay for it. So, it is a bit strange when moving to US, and then being responsible for the poor security of the cards (debits or credits) provided by my US bank. Now the anti-fraud system is pretty sophisticated. I once got my CC being copied at a fast food, charged fraudulently like less than 30min after my order at the fast food, and have the CC company called and asked to verify the fraudulent charge. It is just strange not spend that money upfront with better security on the cards, rather than let it wide open and then build complex/velocity/AI system to point potential fraudulent charges, call me, cancel charges, and send me a new CC.

> but it is effectively debited at the end of the month only. So you have to pay in full at the end of the month.

In the US, you've described "Charge Cards." Some of the cards American Express offers are charge cards. (I don't know of other vendors with such cards.)

Diners Club, although they're a very small player. Some corporate cards as well, I believe. Possibly some of the niche cards targeted at people with very bad credit act this way as well.

Basically the very large majority of consumers won't see a charge card besides AmEx.

Wait, how are you responsible for poor card security? You are protected from more than $50 in liability by federal law, and more than $0 by virtually every issuers policy. More often than not, your issuer automatically detects and blocks fraudulent purchases.

Overdrafts.

It’s the first of the month and your mortgage and car payment is debited. Except some asshat drained your account and the overdraft exceeds your accounts limit.

Eventually everything gets fixed, but you deal with a lot of stress and risk.

There’s literally no reason to not carry a credit card and have the bank hold the risk.

>I have never used a credit card when living in Europe, it was a debit card... but it is effectively debited at the end of the month only. So you have to pay in full at the end of the month.

This is pretty much how the high tier credit cards work in the US (or atleast how the people who own them say they work). The CSR has some insane 28% APR, way higher than Chase's mid tier card. Amex's premium cards (Gold, Platinum) also work the same way.

In your case, what happens when you don't have enough money at the end of the month? You are effectively in debt.

Not sure where you got your APR info, but it is not correct. CSR's advertised APR[1] is 17% to 24%, which of course varies based on your credit history. I checked my own account and see my CSR's APR is 16%, and it's sometimes possible to get a decrease if you ask. (To compare, I also have a Freedom, the mid-tier card, at 15% and the Amazon card at 18.25%.)

I also have an Amex, which is nominally a charge card, but they are now functionally no different than a credit card. It has an 18.25% APR for the "Pay Over Time" balance.

Of course, none of this really matters if you're using the cards responsibly, because you pay the statement balance in full every month. The grace period means there is no interest at all. No credit card has a good interest rate (outside of promos), and if you need to borrow money, there are better ways of doing it.

Any credit card should be treated like a charge card or debit card. Don't spend more than you have, put it on auto pay, zero interest is charged, your bank account is debited once a month, and along the way you collect lucrative rewards and get better fraud protection and fringe benefits.

(Admittedly, this all assumes that you can qualify for a decent card and can use it responsibly, which sadly the majority of Americans cannot.)

1. https://applynow.chase.com/FlexAppWeb/pricing.do?card=G3L2&p...

Yes, you are in debt. Depending on your bank, your history with the bank, and the amount owed, it can go from nothing, to triggering a penalty, or an immediate freeze of all your bank accounts (across all banks/institutions in the country). The whole freeze happened to me (not my fault), it is pretty impressive. All debit/credit cards are rejected immediately, you better have some spare... and visit the bank that issued the asset freeze and fix it. So, yeah, you learn quickly to not over spend.

At some point someone is paying for the fraud, and it's not the bank, it's the merchant, that increase slightly the price to account for that, so in the end you pay for it. Same for cashback.

I work in the credit card industry. It's more complicated then that. Depending on who has EMV enabled correctly greatly shifts the fraud load. But banks can and do pay a huge part of the fraud which is passed on to consumers in higher interest rates. Merchants pay "cashback" by some definition but it's fungible. If there were no cashback that money would go directly to the banks and the end user would have lower interest rates.

What I mean is it's like every insurance, they estimate the risk and collect enough money to pay for this.

As you say, it is orthogonal. Why not have both? You pay for the fraud with higher fees compared to a system where fraud is prevented by additional security.

Credit cards do have this, that's one of the use-cases of the pin on the back. The eWallet products being pushed by various companies neatly bridges the chip/pin to the card, giving chip/pin style protections digitally.

Most phones require you to use some form of passcode (6 digits, TouchId, FaceId) which are effectively pins prior to using a payment method. Additionally, there are secure chips in your devices to do the actual processing. This means that digital purchases through eWallet methods are effectively chip + pin while still getting credit card fraud protections.

Reply on news.ycombinator.com