Should You Get A Credit Card Or A Debit Card?

June 28, 2011 by  Filed under: Credit 

These days everyone needs a credit or debit card to not only make purchases but to book airline tickets, reserve hotel rooms, and lease cars while traveling. You will need to decide between a debit card vs credit card. There are many advantages of both cards, this article will look at some of these advantages to help you decide what type of card is right for you.

One advantage of using a debit card opposed to a credit card is that if your place of employment offers direct deposit, your paycheck can be credited to your debit card. This can also be done with social security and unemployment deposits. This gives people access to money much faster that waiting for a check in the mail and then having to deposit or cash it at a bank. The direct deposit also avoids a check casing fee that some banks and check cashing stores charge. The disadvantage is the debit cards charge a transaction fee every time you use your debit card. The fee varies from card to card and is usually around $3.00 per purchase. No matter how large or small the purchase the fee is the same.

There is a big advantage of using a credit card instead of debit or savings when buying gasoline at the pump. When using a debit card some gas stations will put a $50 hold on your debit card for up to a week. This does not happen when using a credit card.

Debit card and credit card use has many advantages and disadvantages. Credit is great if you always pay your balance before the payment due date is posted to avoid fees and interest charges. Few people do this however and this makes credit cards a bad option for most people making purchases, as they will end up having to pay a considerable amount of interest on top of their purchase amount. The advantage to using a debit card in this same scenario is; the debit card does not incur interest, since it is backed up by the amount of cash that has been “loaded” onto it, you cannot go over your limit and never pay interest on a purchase.

Another comparison of debit use vs credit use is that credit purchases affect your credit rating and credit scores, and debit purchases don’t. The advantage of conservative credit card use and paying on time is that it will greatly improve a person’s credit score rating. On the other hand, misuse of a credit card will harm a person’s credit rating, and effect future requests for credit, such as; different credit cards and applying for home and auto loans. The way a person treats their credit can also affect the rates they are quoted for car insurance and the amount they will pay in rent at corporate owned and operated apartment complexes.

When it comes to the question of debit vs credit, the answer might be that both are good to have for their own reasons. And always use both wisely, if you are financially conservative then you will be able to handle a credit card easily, if you are somewhat financially reckless then you should probably limit how much you use credit and focus more on making your purchases with savings.

If you would like some more information on these two types of cards, check out our website here for a more detailed comparison of debit card vs credit card. While you are there have a look at the great information we have on the lowest apr credit card, which may help you make up your mind about using credit or debit for your purchases.

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