Down with Debit

I’ve never really liked debit cards. They bother me.  Bank of America’s recently-announced five-dollar-per-month usage charge is a good thing. If industry watchers are to be believed, it’s a Sign of Things to Come and will ripple from bank to bank like another East Coast earthquake. One can only hope this coming wave is the death-knell of debit and hastens a new dawn in the world of personal payment. One might also ask why that’s even remotely desirable.

It’s not the plastic that bothers me. What’s not to like? Unless you’re trying to stay off the grid, break the law, or save up by making it annoyingly hard to spend your own money, a debit card is leagues ahead of cash in just about every conceivable way. Convenience is through the roof. It’s small and lightweight. It won’t stretch out your wallet and ruin the leather. You can get one with a picture of just about anything you like—Spiderman, Jell-O, monster trucks. Get mugged walking back to the Quad? Perfect! Just call it in and watch that money flow right back (if you can find an ATM nearby). And best of all—no stupid coins.

My dislike of debit stems from one simple fact: Despite years spent searching for answers, I have never once identified any good reason to pay debit over credit. Something about it just doesn’t add up—specifically, my precious, precious rewards points. Or, for that matter, my credit rating. And yet many people choose debit over credit every day, in every city, on every street corner, and inside every storefront with a card reader. Isolated in my OCD-like concern and finding no allies for my cause, I’ve been left to lament this broad absence of utility-maximizing behavior in an age when every last dollar counts. Watching a friend pay debit is like watching him aim for the recycling bin but hit the trash instead. Every. Single. Time.

Granted, some debit cards do have limited rewards programs. But there are a whole host of reasons—primarily, different interchange fee structures and a lack of potential revenue from interest charges—that force banks to be less generous than they can be with credit cards. There’s also something to be said about limiting expenses, at least nominally, to what you’ve got in the bank. But debit overdraft fees can bite just as hard as credit over-limit ones and at the end of the day, personal responsibility can be practiced just as well with a credit card as with a debit card, checkbook, or even straight cash.

Debit cards may still have a place in tomorrow’s world of personal finance. In the post-financial-meltdown era, not everyone can qualify for a credit card, and perhaps mom and dad still aren’t ready to trust their angsty, vindictive teenage son or daughter with a risky piece of plastic. But fear of splurging and not even knowing it is no longer a valid excuse to go debit.

The Internet brings hope—even to those of us with the most serious self-control issues. Banks can send out automated texts and email whenever just about anything happens; keeping tabs on a balance becomes less than mindless. Spend a few minutes setting up incessant notifications and have your checking account autopay the bill in full every month and you’ve virtually replicated the debit card lifestyle, but with double the perks! If you're beyond irresponsible and you're also something of a Luddite, though, maybe just stick to cash.

It’s too soon to know for sure, but in scrambling to keep debit cards viable ahead of new government regulations, banks might finally catalyze the homogenization of magnetic payment that I’ve always secretly hoped for. And with a bit of luck, I can start thinking about other things when I buy my coffee.

Karthik R. Kasaraneni ’12, a former Crimson associate editorial editor, is a chemistry concentrator in Lowell House.