I like few things more than writing posts that cause consternation. A recent gem was on my confusion over debit cards and who can forget my assault on the irrational fear of identity theft. So why not combine the two themes?
Consumerism Commentary has a nice post today on writing "Check ID" in the little strip on the back of your credit card where you are supposed to sign it. Turns out that this is a relatively common practice and that it is against Visa and MasterCard’s rules. I guess I’m not really surprised at either of these facts.
Why would a person write "Check ID" on a card? I can only assume that it is an attempt to deter a potential thief from using the card if stolen. Does anybody really think this would work? How often do cashiers actually look at the back of credit and debit cards? And then there are all the situations, from the self-checkout line to Amazon.com, that there is no cashier.
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This is the second in a series inspired by a simple toy at CNNMoney that probably doesn’t deserve the attention. (See the first post in the series here.)
Question three in the financial health quiz is "How many months of expenses do you have in an emergency savings account?" The right answer is pretty 
simple:
You should keep three months’ worth of living expenses in a bank savings account or a high-yield money market fund for emergencies. If you have kids or rely on one income, make it six months.
In other words, you should have six months expenses in cash unless you are a two income household with no kids, a.k.a. DINKs.
Now I happen to think that six months is generally too much, but what makes this sort of conventional wisdom truly infuriating is its one-size-fits all nature. I am sure its defenders will say it’s just meant as a guideline or rule of thumb, but that just begs the question of why we need such a dumbed-down guideline to begin with. Can’t some things in our lives be just a little complicated?
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There was a pretty good post over at WiseBread yesterday on how if a credit card company forgives some of what you owe, what was forgiven is income 
you have to pay taxes on.
On the one hand, this is a point worth repeating because it seems to surprise most people. On the other hand, the post neglects to mention an important exception, and, moreover, feeds into the belief that this is an irrational fluke of the tax code. It isn’t. It makes sense.
You owe Credit Card Corporation (CCC) $5000. Realizing you are unlikely to pay them back in full, and now regretting lending you the money to begin with, CCC agrees to settle the debt for $2000 cash. You sell your PEZ dispenser collection on eBay and send them a check.
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I still don’t get the debit card thing. But according to the WSJ, there is a new trend I do understand: establishments accepting cards but not cash.
Slips of paper and metal disks are an inefficient and archaic form of money. 
You have to go to an ATM to get some, and often pay a fee. To use it, you have to wait for the clerk to make change. You have to carry it around. And then there is the growing pile of coins most of us have at home.
And don’t get me started on parking meters. Offering me a nice parking space for half an hour in exchange for a quarter, and only in exchange for a quarter, is more scavenger hunt than transaction.
Plastic pushing out paper has been a long brewing trend. I can remember when grocery stores didn’t take cards. I still feel a little funny charging things there. Today we take for granted that we can use plastic just about anywhere, even in places, like taxicabs, that a generation ago would have seemed implausible as potential users of cards.
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I have a debit card. I think. It’s the ATM card my bank gave me. It’s got the MasterCard symbol on it, so I think that means I can use it to buy stuff. Of course, this is just a theory. In the ten years it’s been in my wallet I’ve never thought to test it out. Why would I?
I am going to admit right here that I am pretty obviously missing something when it comes to debit cards. Debit card transactions now outnumber credit card transactions. This mystifies me. I can think of only three reasons to carry a debit card rather than a credit card.
1) You are considered a poor credit risk and cannot get a credit card.
2) You can get a credit card but will not because of ethical or religious objections.
3) You find it too difficult to overcome the temptation to borrow more than you should if you carry a credit card, so carry a debit card that will limit your spending to cash you actually have.
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Credit Cards, Identity Theft | Frank Curmudgeon | 
November 11, 2009 12:59 pm | 
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