pros and cons of debit cards vs credit cards

Businesses often accept debit cards to give consumers a payment option outside of cash, check or credit card. Facts. Debit card transactions work very similar. Pros and cons · 1. Security: Advantage credit cards. Both credit and debit card numbers can be stolen. · 2. Fees: Advantage debit cards. While. Knowing the differences between debit vs. credit cards can be tricky, advantages of debit cards, there are also some disadvantages to be.

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Credit Card vs Debit Card [PROS and CONS]

Guide to Prepaid Debit Cards: Pros & Cons, Hidden Fees & More

The popularity of prepaid cards is skyrocketing. An estimated 23 million adults use them regularly — at the gas pump, the grocery checkout, the ATM, and even for direct deposit or to pay bills. Consumers buy prepaid cards, then use them like debit cards, making them a handy financial tool. But they're not without hazards. Let's look at the pros and cons of prepaid cards, how to choose them wisely and what mistakes to avoid, especially when it comes the huntington national bank inc hidden and potentially costly fees.

Who Might Use a Prepaid Card?

Hank has had a run of financial bad luck lately, causing a serious ding to his credit score, and he can't qualify for a credit card. He doesn't want to carry wads of cash in his pockets, though, so he uses his paycheck to buy prepaid cards for his everyday purchases and even to pay his bills.

Pam sometimes has trouble keeping tabs on her account balance. Tired of paying hefty overdraft fees, her solution is to use prepaid cards to avoid spending more than she has. She would rather have a purchase denied than pay another penalty fee.

Retired teachers Patricia and Sam live comfortably on their retirement incomes, as long as they keep a close eye on their finances and don't overspend. To help in that effort, the couple uses prepaid cards loaded with specific amounts for weekly groceries and entertainment. It's a good idea to keep a rein on their budget.

Jack and Ella are about to send their eldest child off to college. This will be the first time daughter Annie will be on her own — and handling her own finances. Mom and Dad decide to equip Annie with a prepaid card loaded with a finite silver lake bank login of cash. They see it as a way for Annie to practice using credit while keeping her spending in check, and it protects them from the risk of her unwittingly racking up a mountain of debt.

Marcie is a keen online shopper, regularly scouring people-to-people marketplaces on the internet for collectibles, books and handcrafted items. Paying by cash is out of the question, and she feels more secure and more comfortably anonymous using prepaid cards rather than her personal credit card online.

Jack is fresh out of high school, still deciding where life will take him next. While he takes some time to mull his options, Jack works at a minimum-wage job. His take-home salary is too low to counter the low-balance fees of a traditional bank checking account, so he has his paycheck directly deposited onto a prepaid card.

In the neighborhood where Lauren and Steve live, there are no bank branches. Rather than go out of their way every time they need cash, they keep prepaid cards handy for their everyday purchases.

Not long ago, your choices to pay for goods or services were cash, checks or credit cards. Today, many consumers reach for prepaid cards. In fact, prepaid cards are among the fastest-growing consumer financial products in the U.S., according to the Consumer Financial Protection Bureau (CFPB). Consumers put nearly $65 billion on "general-purpose reloadable" (GPR) prepaid cards in 2012; that was predicted to almost double to $112 billion by 2018.

Prepaid Cards 101

Prepaid cards are easy to get and can be a convenient alternative to cash, checks or credit cards. Known officially as "general-purpose reloadable" and sometimes as prepaid debit cards or prepaid credit cards, prepaid cards are loaded with cash. They can be used at ATMs for withdrawals and to purchase just about anything in person or online, similar to debit cards tied to checking accounts.

People who do not have a checking or savings accounts, or who use them very little, used to be the main users of prepaid cards. But prepaid-card usage is becoming more common, growing more than 50 percent between 2012 and 2014, driven primarily by increased nevada state bank hours near me among those consumers who do have bank accounts.

Types of Prepaid Cards

1

General-Purpose Reloadable Cards

For the purposes of this guide, we're primarily talking about this type of card: You load money onto it, and then use it like you would a debit card. GPRs typically sport network brands, such as Visa, MasterCard, Discover or American Express, and can be used anywhere credit cards are accepted.

2

Gift Cards

These cards come in specific monetary denominations, good for purchases at specific stores (think Amazon gift card). They usually are not reloadable, and they're perfect for gifting.

3

Payroll Cards

Just as the name says, instead of a paycheck, some employees receive prepaid cards loaded with their salary amounts. They can then use the cards like they would debit cards to purchase goods and services and to pay bills.

While the above are the top three most commonly used prepaid cards, others include government benefit cards that pay unemployment benefits, child support and other benefits; public transit system cards; and some college ID cards.

Prepaid Cards Vs Credit and Debit Cards

At this point, you may be wondering how prepaid cards differ from debit and credit cards. They may look alike, but they all function differently.

  • This is an icon

    With a credit card, you borrow money you must pay back, with interest if you do not pay the balance by the due date. To get one you have to have good credit, and using one responsibly will continue to improve your credit rating. This in turn can help you down the line to get better rates on car loans, mortgages, etc. On the other hand, using a credit card irresponsibly can lead to overspending, debt accumulation, late payments and, ultimately, damaged credit.

  • This is an icon

    A debit card is issued by your bank and linked to your checking or savings account. The money is yours and there are no interest charges, but there can be penalty fees for overdrafts. As with your checkbook, you'll want to keep track of your balance.

  • This is an icon

    With prepaid cards, you spend money that has previously been loaded onto them; they aren't connected to checking or savings accounts. They work like debit cards, but you do not need a bank account (or good credit) to get one. You can purchase the card in a certain amount, but you can add additional money to it at any time. When the balance is gone, your card stops working unless you add more money to it.

Hidden Fees to Watch Out For

All prepaid cards are different and may charge varying fees, from a charge for each pros and cons of debit cards vs credit cards you use the card to make a purchase to a fee for using it to withdraw cash from an ATM. These fees can add up quickly, eating away at the balance of money you've loaded onto the card. It's important to read the fine print to find the best deal. Look for information on the card, inside the card package or at the card issuer's website

Some activities your card provider might charge for and a range of their associated fees include:

  • Card purchase and/or activation: $0-$30
  • Card reload: $0-$5
  • Monthly service: $0-$9.95
  • Purchase transaction: $0.49-$2
  • ATM withdrawal: $1-$3
  • Inactivity: $2-$5.95/month
  • Balance inquiry: $0.49-$2
  • Paper statement: $0-$5.95+
  • Lost card replacement: $10+
  • Card cancellation: $10+
  • Overdraft: $15+

Other possible fee-incurring activities include:

  • Bill payment
  • Additional card
  • Inactivity
  • Stop payment
  • Decline
  • Card-to-card transfer
  • Foreign transaction

Sources: CFPB and knowyourcard.org

FAQs

You can purchase prepaid cards from retailers' stores or websites, other online sources, check-cashing businesses and banks or credit unions.

Funds can be added to the cards through direct deposit, at stores or by depositing checks using ATMs or mobile devices.

Want to know how much is left on your card? Depending on your card, you can usually check your balance via a phone call, text alert, email alert, a website, a phone app or an ATM. You may be charged a fee for certain methods.

Currently, some prepaid cards are covered by some consumer protection laws and regulations, but others are not. That will change in October 2017, when new CFPB rules go into effect.

The new rules will help customers avoid costly fees and give them the same protections that come with traditional debit and credit cards. Consumers will be able to compare cards more easily, and their money will be safe if their cards are lost or stolen.

Under the new rules, fees must be disclosed on the outside of card packaging. Consumers who report lost or stolen cards within two days will be only liable for up to $50 of their losses. Issuers must provide free and easy access to prepaid cardholders' account information, and those issuers who do give prepaid-card consumers the option of spending more money than they have deposited in the account must give protections similar to those on credit cards.

The Pros & Cons of Using a Prepaid Card

The advantages and disadvantages of prepaid-card use varies widely by card. Following are some issues to consider when purchasing a prepaid card; not all cards have all the pros nor all the cons listed below.

Pros

  • You can buy them almost anywhere.

  • You can use them pretty much everywhere.

  • If you lose cash, it's limited. If your credit card is stolen, the thief could rack up substantial charges. If you lose your debit card or checkbook, a thief could drain your account. But if you lose a prepaid card, your loss is limited to the amount on the card. Also, some prepaid cards offer protections against loss or theft.

  • This is a plus for those with less-than-stellar credit histories.

  • You can load your monthly grocery budget, for example, on a prepaid card. Use it only for groceries, and when it's spent, live off what's in your pantry until the next month.

  • Loathe sifting through paperwork or electronic statements? There's a monthly bill with prepaid cards.

  • No problem. With a prepaid card in your pocket, you'd to go.

  • When using a prepaid card, you're spending a specific amount of money you've loaded onto it, so there is no chance of incurring debt with it.

  • This protection is built in because when your card reaches a $0 balance, it stops working.

Cons

  • This is the biggest, most significant downside to prepaid cards and may outweigh all of the pros. Beware! See "Hidden Fees to Watch Out For" above.

  • Money stored on prepaid cards does not accrue interest.

  • Prepaid cards currently have fewer purchase and fraud protections than credit or debit cards. That changes in October 2017 (see "How Prepaid Debit Cards Work"), but for now, check the terms of your card.

  • Prepaid-card activity is not reported to the three major credit-reporting agencies, so it doesn't affect your credit score. As such, it will not help build your credit.

Expert Advice on Using a Prepaid Pros and cons of debit cards vs credit cards Card

Jeffrey Berdahl, CPA/PFS, CSEP, is a partner at RLB Accountants in Allentown, PA. His areas of expertise include tax planning and preparation, financial planning and business acquisitions as well as accounting and management advisory services. He is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants.

Why are prepaid cards so popular?

Jeffrey Berdahl:

There are many reasons. A lot of people like to use them as a stopgap for spending. Maybe they want to limit how much they are spending, so they put a certain amount on a prepaid card, say $100. When the hundred dollars goes to groceries, they're on a set budget, as opposed to writing a check, where it's easy to spend more than they intended, and then they possibly face overdraft fees.

Prepaid cards are also popular with those who have soiled credit and have difficulty getting banking in the conventional sense, as well as parents sending kids off to college for the first time who feel more at ease equipping them with prepaid cards with finite amounts of cash.

And some individuals just feel safer with prepaid cards in their is grated parmesan cheese bad for you rather than cash or debit or credit cards. They feel that the loss or theft of the prepaid card is better than getting their checking account wiped out or having the credit card abused by a thief.

Also, people my father (80) always carried cash. I carry debit and credit cards, and many millennials seem to favor these prepaid cards. They don't have to deal with banks, there's no hassle, they're easy to reload and there's some generational aspect to it as well.

What are the drawbacks of using prepaid cards?

Jeffrey Berdahl:

The fees are all over the place. A prepaid-card user might face an initiation fee for turning the card on, a fee for each transaction, a monthly maintenance fee and so on. Consumers really pros and cons of debit cards vs credit cards to stay on top of this and know what they are getting into.

Another issue is the lack of customer service. If you have a problem, it's not like you can walk into your bank branch and someone there will take care of it for you. With a prepaid card, you might be calling a 1-800 number and be lucky to get a live person. I think that's a big disadvantage, especially when you're dealing with access and security. It's really comfortable to be able to talk to an actual person in your bank to get a problem resolved.

Are there alternatives for people considering prepaid cards?

Jeffrey Berdahl:

Well, there are money orders, cashier's checks and certified checks. Of course, as long as a problematic credit history isn't a problem, it possible to go the old-fashioned route— setting up checking and savings accounts with a bank. Another option offered by some banks is a checkless checking account, also known as e-checking. You do your banking online or on a mobile phone and use a debit card to get cash and make purchases.

How can consumers avoid mistakes when using prepaid cards?

Jeffrey Berdahl:

My first recommendation is to purchase prepaid cards from a bank or a known, reputable institution and not from "ABC Company." Be savvy and know what you're doing. Look for and read all the accompanying information to avoid getting ambushed by hidden fees. Right now there are no mandatory, uniform disclosure rules, so it is up to the consumer to stay educated.

About the Author

expert-profile

Michele DiGirolamo has worked as a journalist and non-profit communications administrator and now writes about business, health, food and lifestyle topics from Haddonfield, NJ.

*Rates or fees may vary or include specific stipulations. We recommend visiting the card issuer’s website for the most up-to-date information available.
Advertiser Disclosure: MoneyGeek has partnered with CardRatings for our coverage of credit card products. MoneyGeek and CardRatings may receive a commission from card issuers. To ensure thorough comparisons and reviews, MoneyGeek features products from both paid partners and unaffiliated card issuers that are not paid partners.

Источник: https://www.moneygeek.com/credit-cards/prepaid/

All the reasons why you should launch a credit or debit card

Over the previous two or three years we’ve seen an explosion of new debit and credit card products come to market from consumer and B2B fintech startups, as well as companies that we might not traditionally think of as players in the financial services industry.

On the consumer side, that means companies like Venmo or PayPal offering debit cards as a new way for users to spend funds in their accounts. In the B2B space, the availability of corporate card issuing by startups like Brex and Ramp has ushered in new expense and spend management options. And then there is the growth of branded credit and debit cards among brands and sports teams.

But if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users.

To learn more about launching a card product, TechCrunch spoke with executives from Marqeta, Expensify, Synctera and Cardless about the pros and cons of launching a card product. So without further ado, here are all the reasons you should think about doing so, and one big reason why you might not want to.

Because it’s (relatively) easy

Probably the biggest reason we’ve seen so many new fintech and non-fintech companies rush to offer debit and credit cards to customers is simply that it’s easier switched at birth season 5 ever for them to do so. The launch and success of businesses like Marqeta has made card issuance by API developer friendly, which lowered the barrier to entry significantly over the last half-decade.

“The reason why this is happening is because the ‘fintech 1.0 infrastructure’ has succeeded,” Salman Syed, Marqeta’s SVP and GM of North America, said. “When you’ve got companies like [ours] out there, it’s just gotten a lot easier to be able to put a card product out.”

While noting that there have been good options for card issuance and payment processing for at least the last five or six years, Expensify Chief Operating Officer Anu Muralidharan said that a proliferation of technical resources for other pieces of fintech infrastructure has made the process of greenlighting a card offering much easier over the years.

Источник: https://techcrunch.com/2021/09/02/all-the-reasons-why-you-should-launch-a-credit-or-debit-card/

Credit, charge, ATM, and debit cards are not all alike. Here's some information to help you choose wisely.

Credit cards, charge cards, ATM cards, and debit cards are all ways to make purchases or get cash. But each one works differently—and these differences are important.

In order to use these cards wisely, you should know what each one is and how it differs from the others.

Credit Cards

The way credit cards work is fairly straightforward: The credit card issuer gives you a card. You use the card to pay for items and services up to a certain total amount—your credit limit. The store merchant or service provider collects what you owe from the card issuer, whom you repay. (Get information about getting a credit card if you have bad credit.)

Carrying a balance. If you carry a balance, credit cards function like very expensive loans. The credit card company allows you to pay off what you owe little by little each month, as long as you pay a minimum amount each time. In exchange, you pay interest on the balance you owe (as high as 29% each year) at the end of each period. (Read about how to dispute a billing error on your debit or credit card statement.)

How credit card companies make money. Credit card companies earn high fees in several ways.

  • High rates of interest—interest on credit cards accounts for the bulk of the profits earned by banks that issue credit cards.
  • Annual fees.
  • Late fees, over-the-limit fees, and other miscellaneous charges.
  • Charging merchants and service providers a fee each time a customer uses the company's credit card in the merchant's establishment.

The federal Credit CARD Act of 2009. President Obama signed the Credit Card Accountability and Disclosure Act of 2009 (the Credit CARD Act) into law on May 22, 2009. The law provides additional protections to consumers, including better disclosures of account terms, limits on interest rate hikes, and restrictions on certain billing practices and fees.

(If you're in the market for a new credit card, read Choosing a Credit Card: What You Need to Know.)

Charge Cards

Charge cards, also called travel and entertainment cards, are a little different from credit cards. Charge cards, such as American Express and Diners Club, have no credit limit. You can usually charge as much as you want, but are required to pay off your entire balance when your bill arrives.

You cannot carry a balance. With most charge cards, you're required to pay off the entire balance when your bill arrives. If you don't, you'll owe a late fee. If you don't pay the amount due for two billing periods in a row, you'll typically have to pay a heftier late fee of around $35 or a percentage of the past due amount (typically around 2 to 3%), whichever is greater. Also, the creditor can cancel the card once you default. Some charge cards give you the option to pay a bill off over time. If you choose to do this, you'll accrue interest on any charges you pay over time and face a penalty APR if you don't keep up with the minimum payment amounts.

How charge card companies make money. Charge card companies make their profits by charging high annual fees -- up to about $90—and by charging merchants relatively high fees each time a customer pays using the company's charge card. Some merchants don't accept charge cards for this very reason.

Cash Advances

Many people use their credit cards to obtain cash advances. Similarly, many credit card issuers send cardholders "convenience" checks they can use to pay for goods or services. The amount of the check appears on your credit card statement as a charge, but is generally treated as a cash advance.

Cash advances are more expensive than standard credit card charges and have more onerous terms for consumers, including:

  • Transaction fees. Most banks charge a transaction fee of up to 4 to 6% for taking a cash advance.
  • No grace period. Most banks charge interest from the day the cash advance is posted, even if you pay it back in full as soon as your bill comes.
  • Higher interest rates. The interest rate is often substantially higher on cash advances that it is on ordinary credit card charges.

ATM Cards

ATM cards are issued by banks, essentially to give bank customers flexibility in their banking hours. In most areas, you can use an ATM card to withdraw money, make deposits, transfer money between accounts, find out your balance, get a cash advance, and even make loan payments at all hours of the day or night.

Debit Cards

Debit cards combine the functions of ATM cards and checks. When you pay with a debit card, the money is automatically deducted from your checking account.

Combo ATM/debit cards. Many banks issue a combined ATM/debit card that looks just like a credit card and can be used wherever credit cards are accepted. But don't be mistaken—they're not credit cards. The money you spend comes out of your checking account immediately.

Pros of debit cards. Many people prefer debit cards over checks for two reasons:

Cons of debit cards. There are disadvantages to using debit cards.

  • Payment is immediate. Many people prefer having 20-25 days to pay their credit card bills.
  • No right to withhold payment. Because the money is immediately transferred, consumers using debit cards don't have the right to withhold payment in the event of a dispute with the merchant over the goods or services purchased.
  • Transaction fees. Some banks and merchants charge transaction fees for using debit cards.
  • High risks if stolen. If your debit card number is stolen during an online purchase, the thief may drain your bank account before you notice it's gone. (Learn about your liability for unauthorized credit and debit card charges.)

For a comprehensive discussion of credit and debit cards, along with information about budgeting and dealing with debt collectors, get Nolo's Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Amy Loftsgordon and Cara O'Neill.

Источник: https://www.nolo.com/legal-encyclopedia/different-types-of-credit-debit-29810.html

The Pros and Cons of Credit vs. Debit Cards

Nearly 70% of millennials prefer debit to credit cards, according to a 2015 report from Chime, and Transunion reports they have fewer bank-issued and private label cards than older generations.

It’s understandable that they might pros and cons of debit cards vs credit cards wary—credit card debt is a serious problem in the U.S., and it’s hard to dig yourself out of once you fall into it. The credit industry is incredibly opaque and predatory. But a credit card is also an important tool that, when used responsibly, can help better your financial situation over the course of your life.

Here are some things to keep in mind about the differences between debit and credit cards.

Image for article titled The Pros and Cons of Credit vs. Debit Cards

Debit Cards

Pros:

  • Money is taken out automatically, so it can make day-to-day spending more transparent.
  • You can set up automatic transfers to your savings account.
  • You can withdraw cash from an ATM or other vendor.
  • Spending doesn’t affect your credit score.

Cons:

  • It’s less secure than a credit card, especially for online purchases. Issuers refund fraudulent credit purchases much more quickly than debit purchases.
  • If your card is stolen and it takes you “more than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you,” to report the theft, you could be liable for up to $500 in fraudulent charges.
  • You can overdraft and have to pay the corresponding fee (the average is $33.38, per Bankrate).
  • Spending can’t improve your credit score.
Image for article titled The Pros and Cons of Credit vs. Debit Cards

Credit Cards

Pros:

  • Points, rewards, and cash-back add value to money you’d already be spending, and all the different types—travel, cashback, etc.—let you prioritize what matters to you.
  • More secure than a debit card, especially for online shopping. The most you’re liable for is $50 after you report it stolen, thanks to the Fair Credit Billing Act (FCBA), and some companies will waive that.
  • Easier to get refunds if your card is stolen.
  • Can be used to best high yield savings rates up credit score to help with borrowing—your payment history is the most important component of your FICO score (it accounts for 35%), but the length of your credit history (i.e. how long you’ve had a card) is also considered. This can save you thousands of dollars in lower interest rates when you’re borrowing for a house or car over the course of your life.

Cons:

  • Easy to fall into debt if you overspend: The average household with credit card debt has balances of $16,883, according to NerdWallet.
  • Difficult to compare and contrast every single type of card and how it can help (or hurt) you.
  • Can hurt your credit score if you’re not careful with your spending.
  • Many people are not knowledgeable about how to maximize their score, pay off their debt, or even what their interest rate is or how it works.

Personal Finance

Источник: https://lifehacker.com/pros-and-cons-of-using-debit-vs-credit-cards-1821128501

Debit vs. credit: The basics

Disclosure: Team Clark is adamant that we will never write content influenced by or paid for by an advertiser. To support our work, we do make money from some links to companies and deals on our site. Learn more about our guarantee here.

Whether you have a debit card, a credit card or both, you can get yourself into some serious financial trouble without a good understanding of how each one works and the differences between the two.

The two cards may seem pretty tarrant county jail downtown fort worth — both plastic, both have your name and a bunch of numbers, and both can be used almost anywhere — but that’s about as far as the similarities go.

In fact, debit and credit cards are two very different things. It’s crucial that you understand how each card works, so you can make the best decisions regarding how and when to use each one. Although you may already know some things, there are a lot of lesser-known perks and dangers that come with both debit and credit cards.

This guide takes you through the basics of how each card works, the pros and cons, and a few other things you need to know in order to control and protect your money!

And remember, you don’t have to be a financial pro — you just need to have the right information and a little common cents!

A lot of people stick with a debit card as a way to control their spending and avoid racking up big credit card debt because you can’t spend what you don’t have with a debit card. In the aftermath of the Great Recession, capital one loan phone number strategy became a very popular one as many people were forced to rethink their spending routine.

But debit cards are full of hidden dangers — and what’s confusing is that these dangers are often the same features that make them an appealing alternative to credit cards.

So let’s take a look at how each card works.

Debit cards

  • A best movies on amazon prime february 2020 card is linked to your checking account.
  • Any time you make a purchase, the money comes directly pros and cons of debit cards vs credit cards of your account.
  • Because the card is linked to your checking account, you can only spend whatever money you have in your account.

Credit cards

  • When you swipe a credit card, you’re spending someone else’s money — money the bank or credit card company has given you access to.
  • And that money isn’t free — when the bank agreed to lend you the money, you agreed to pay a fee for it in the form of interest.
  • So if you charge a bunch of stuff on a credit card and pay the bill in full before it’s due, you don’t pay any interest — because that would mean the bank got all of its money back.
  • When you don’t pay the bill in full, meaning you start the next month with a balance on the card, you will be charged interest, which is added to the total balance.

Now that you have a basic understanding of how debit and credit cards work, it’s important to know the pros and cons of each.
But just a heads up, even though certain features are considered pros, there may be cons that cancel them out.

Pros of debit cards

  • A debit card is linked to your bank account, so you can only spend what you have. This is what makes debit cards appealing for a lot of people, since that restriction can help you control your spending.
  • You can use it pretty much anywhere.
  • Since the money comes right out of your account, you know how much you have left for the month.
  • You can get cash with a debit card — so if you need actual paper money, you can use your debit card at an ATM or to get cash back at a store.
  • And with debit cards, you don’t pay interest on the money you spend — since it’s your money.

Pros of credit cards

  • You can use a credit card pretty much anywhere.
  • A pros and cons of debit cards vs credit cards card can give you immediate access to money you may not have in your checking account, like if you need to cover something you can pay back with your next paycheck. Just make sure you can pay it back before the bill is due.
  • Using a credit card for emergencies is not ideal (which is why you need emergency savings), but it can be a last resort if you’re really in a bind,
  • On the same note, a credit card also gives you flexibility. You shouldn’t go crazy, but as long as you can pay off the balance in full before the due date, you won’t be charged any interest, and that can give you some flexibility throughout the month and between paychecks.
  • One of the biggest benefits of a credit card is that it can help you build credit — as long as you use it responsibly.
    • If you pay your bills in bank of america call center spanish and on time gap visa card member login month, those on-time payments help improve your credit score, which can get you lower interest rates down the road on things like a car loan or mortgage.
    • Basically, making on-time payments gets lenders to trust you more — so you always want to pay the bill in full and on time each month.
  • Credit cards also come with rewards, which vary based on the card. Some examples are cash back, airline miles, discounts, additional insurance coverage and more. There are tons of different rewards programs out there. Some even offer additional warranties or insurance coverage on certain purchases, like cell phones.
  • One of the best features of credit cards is the protections they offer, which are much better than those offered on debit cards.
    • If your credit card number is stolen, but not the physical card, “you are not responsible for unauthorized charges under federal law,” according to the Consumer Financial Protection Bureau.
    • If the actual card is stolen, you are liable for no more than $50 in authorized charges — as long as you report it to your card issuer. Some issuers won’t even charge you the $50.
    • Also, when someone makes fraudulent charges on your credit card, no money actually leaves your hands. So while you get it straightened out, you aren’t stuck with a huge chunk of your cash missing ‘ like you are when debit card fraud occurs.

Cons of debit cards

This is where you’ll see how some of the pros of debit cards can easily pnc bank auto loan payment online cons if you aren’t careful.

  • Debit cards can actually be riskier than carrying cash. It’s not great if someone steals your cash, but since your debit card is linked to your bank account, if someone steals your card, they could get access to every cent in your bank account.
  • Because you can only spend what’s in your account, that really limits your overall spending ability.
  • Fees: Although there typically aren’t fees associated with a checking account (besides overdraft fees), there are several fees you could face with a debit card depending on how you use it. (If you are paying an annual fee for your checking account, it’s time to shop for a new one!) Here are some common fees american express gold card pay bill face with debit cards:
    • Foreign transaction fees: Many banks charge you a fee when you use your debit card to make a purchase or withdraw money abroad.
    • ATM fees: Many banks also charge you a fee to withdraw money from an ATM that’s not affiliated with your bank.
    • Overdraft: If you overdraw your account, you’ll be charged a fee.
    • Keep in mind that specific fees will vary depending on your bank and your card.
  • Another downside to debit cards is that they don’t help you build credit, like credit cards do — and building a good credit history of on-time payments is important for your overall credit and credit score — especially when it comes time to get a big loan for something like a car or house.
    • If you report the card as lost or stolen within two business days, you won’t be responsible for more than $50 of unauthorized transactions.
    • If someone uses your physical Seaside towers rentals waikiki or debit card without your permission (meaning it was stolen) and you report the fraudulent charges within 60 days after your statement is mailed to you, you could lose as much as, but no more than, $500.
    • If someone uses your card number to make a fraudulent charge, but your card or PIN has not been lost or stolen, under federal law you will not be liable for the transaction if you report it within 60 days after your account statement is sent to you.
    • If someone uses your ATM or debit card without your permission and you don’t report it within 60 days after your statement is mailed to you, the potential damage is chs mankato cash bids. You could lose all the money in that account, the unused portion of your maximum line of credit established for overdrafts, and even more.
    • A lot of banks do now issue what’s called a “zero-liablity” policy with some debit university of texas at austin biology — which is meant to give you more protections. But, there are a lot of exceptions to those policies so you have to be careful and make sure you understand the details of the specific policy (which can get complicated). The biggest downside to debit cards is the lack of protections they offer for you as a consumer. Here’s a closer look:

Cons of credit cards

  • If you have a hard time controlling your spending, a credit card can get you into big trouble fast.
  • If you don’t pay off the balance in full each month before the due date, that’s when people start to fall behind — because when you carry a balance on the card from one month to the next, the interest charges kick in and that money is added to your overall balance.
  • When you’re only paying the required minimum each month, interest charges continues to add up — increasing the total balance even more — because keep in mind, when you only pay the required minimum payment, you still get charged interest. So as interest increases the balance each month, those minimum payments aren’t really even making a dent in getting that total amount paid off. It’ll take you longer to pay off the card and cost you more money over time — making the items you charged on the card a lot more expensive than what you paid for them. That’s when credit card debt can quickly spiral out of control.
  • Fees: Many credit cards come with some type of fee, or fees, so when you’re choosing a card, make sure to look for one with the fewest to no fees.

The best way to take advantage of the benefits of bank of commerce atm account number credit card is to charge only what you know you can pay off at the end of the month. If you’re just starting out and trying to get control of your spending and saving, a credit card can be dangerous — so just be honest with yourself about what you can realistically handle.

Credit card interest example

Here’s an example to give you an idea of why paying off the balance on a credit card each month is so important!

  • The average interest rate on credit cards right now is around 15 percent.
  • Let’s say your credit card balance is $1,000 and you can only pay the minimum payment each month — around $20 to $25.
  • It would take you about 8 years to pay off that $1,000 — assuming you don’t charge anything else on the card — and you’d also pay more than $700 extra in interest.

When you carry a balance on the card from one month to the next, that’s when the interest charges kick in, adding to the total balance. So the longer you keep a balance on the card, the higher it continues to get each month.

When you pay the bill in full, meaning you pay off the entire balance so it’s back at $0, before the due date, routing number on check commerce bank won’t have to pay any interest.

Debit and credit cards come with very different features and protections, and there are some situations when it’s always better to use a credit card.

There are some places where your card number and information are at a much higher risk of getting stolen, and if it’s a debit card, that could mean all the money in your bank account. So when you consider the vastly different fraud protections listed above, using a credit card where fraud is more common can help you protect your money — since again, a credit card comes with much better protections.

Some purchases may require an extra deposit if you use a debit card, which is a way for companies to guarantee payment in case you don’t have the money in your account to cover the charge, so it’s better to use a credit card in those situations. Plus, credit cards often include extra insurance coverage in certain situations, like travel cancellations.

So with all that in mind, here are some places and situations when you should avoid using a debit card if possible:

  • Pay at the pump
  • Shopping online
  • At the supermarket/grocery store
  • At the car rental counter
  • Booking advanced travel
  • When buying furniture and major appliances
  • When setting up automatic drafts and/or recurring bill payments
  • Independent ATMs
  • Restaurants
  • Anywhere you are a new customer
  • Small vendors like those at markets and other places you aren’t familiar with

If you only have a debit card, consider using cash when you can (obviously except for ATMs).

And if you only have a debit card, here are some ways minimize your risks:

  • Only use bank-affiliated ATMs. They offer a higher level of security, which means they’re less likely to be compromised by scammers. Never use independent ATMs, like those at gas stations or in other less-monitored areas.
  • When using an ATM, cover the keypad when entering your information — a criminal could be watching.
  • Don’t share your debit card PIN, don’t write it on the card and don’t write it down anywhere that someone could see it.
  • Always sign for debit-card transactions when possible.
  • If there’s a “tip” field/line on a receipt that doesn’t require a tip, or you aren’t giving a tip, take the extra precaution of writing in $0.00 on that line and also write in the total.

More ways to prevent and protect against fraud

  • Check your accounts and statements EVERY SINGLE DAY. The quicker you recognize a fraudulent charge, the better chance you have of resolving it and getting your money back.
  • Report any fraudulent transactions immediately.
  • Don’t pay any bill associated with fraudulent charges.
  • Never share your banking or other personal/sensitive information via email, text or phone (unless you call the bank directly). Even if the email or text looks legitimate (showing the bank’s logo etc.) it could very easily be a scam! Any time someone reaches out to you asking for personal or sensitive information, don’t give it to them right away. Instead, hang up or delete the email or text, and then contact the company directly — either by phone or by visiting their legitimate website directly.

RELATED: A credit freeze is the #1 best way to protect against identity theft

Prepaid cards have become an increasingly popular option for people who want to control their spending without worrying about the risks associated with debit cards.

Here’s how it works: you load money onto the card and use it like a debit card, community bank and trust southeast alabama you’re spending your own money. But what makes prepaid cards different is that they are not associated with a bank account (like a debit card is).

They’re different from credit cards because there is no credit involved — you load your own money onto the card and you spend your own money. When the balance gets low, you just put more money on there.

Prepaid cards are typically accepted anywhere you can use a debit card. Some will let you pay bills online, set up automatic monthly payments and even get cash out of an ATM. There are also more options now for reloading prepaid cards — transfer money from the bank, link your paycheck via pnc robinson branch deposit, transfer money from PayPal or reload it at a local retailer like Wal-Mart.

Prepaid cards aren’t tied to a bank account, so you don’t risk losing all of your money in case of fraud. And because you can only spend what’s available on the card, you don’t risk racking up big credit card debt.

One of the disadvantages of prepaid cards is that, like debit cards, they do nothing to help you build credit. Plus, prepaid cards often come with a lot of fees, so you have to be careful and make sure you do your research before choosing one.

There are a few things to consider when you’re trying to decide whether you’re ready for a credit card, or if you should just stick with debit or a prepaid card.

If you have a credit card, you’ll still have a debit card as an option if you have a bank account.

So the first thing you need to figure out is whether you think you can use a credit card responsibly — and it’s crucial to be honest with yourself! Consider your spending habits and behaviors.

If you know you can control your spending, using a credit card can be very beneficial for your financial life. It will offer you better protections, help you build credit and earn you rewards at the same time. But the only way to make a credit card work in your favor is to use it responsibly.

Only charge on the card what you know you can pay off before the due date. That way you don’t risk interest charges adding up and increasing the total comerica web banking login to my account, which is when credit card debt can start to spiral out of control.

If you get to a point when you can’t pay the bill in full, pay as much as you can (to get the balance down) and always make sure to pay it on time. Late and missed payments can have a detrimental impact on your credit score — and for a very long time.

One other thing to remember: the amount of your total available credit that you use also has a big impact on your credit score — and you never want to use more than 30% of what’s available to you.

Let’s say you have a credit card with a $10,000 limit. If you’re carrying a balance month-to-month of $3,000, you’re only using 30% of the total limit. But if your credit limit is suddenly dropped to $3,000, then you’re using 100% of what’s available to you. That’s another reason to always pay down credit card debt as quickly as possible — you always want to make sure that your credit utilization rate is 30 percent or less.

Check out our Credit Reports & Credit Scores Guide for more on understanding your credit what factors impact it most.

If you’re just starting to budget and trying to get a handle on your spending and saving, a credit card may be too tempting for you.
This is when you really need to think about your own personal behaviors, because getting into debt is a whole lot easier than getting out. And telling yourself that you can always pay it off later can get you into a lot more trouble than you realize — trouble that can follow you around for years, even decades.

If you decide you aren’t ready for a credit card, consider the different features of debit and prepaid cards.

A prepaid card can help you control your spending and you avoid the risks associated with debit cards. If you’re trying to develop better habits, use it as a budgeting tool. Only load onto the card the amount of money you truly need — then keep the rest of your money in savings.

If you stick with a debit card, make sure to take all the precautions listed above to minimize your risk of fraud and identity theft. If you’re trying to get control of your budget, try using cash or setting up separate checking/savings accounts for different areas of the budget. By keeping your money separate, you limit the potential damage if your card or card pros and cons of debit cards vs credit cards is stolen, and it’s also a good way to get you into better budgeting habits.

For more on how to create, maintain and stick to a budget, see our Budgeting Guide.

More tips on what you need to know about personal banking!

Welcome bonuses can be a great way to boost the value of a credit card.Best Credit Card Welcome Bonuses for 2021-If you're in the market for a new credit card, you may be hoping to cash in on the hundreds of dollars in signup bonuses offered to new customers. Welcome bonuses and offers are a marketing tool that credit card…
Источник: https://clark.com/commoncents/debit-vs-credit-pros-cons-protections-money/

When should you use a credit card or debit card?

When is it better to use a credit card than a debit card?

Thanks to the way they work, credit cards can be more useful than debit cards in certain situations. However, you’ll need to ensure you only ever spend what you can afford to pay back so that you don’t end up with a lot of debt you can’t repay.

Some reasons why you might chose to spend on your credit card rather than your debit card include:

  • To spread the cost – If you need to make a major purchase, such as a new washing machine or a holiday, you might not have enough money to pay up front. By using a credit card, you can spread the cost over several months - using a purchase card with a 0% deal means you can avoid paying interest for a number of months too. 

  • To take advantage of reward schemes  – Some credit cards offer cashback, enabling you to earn money back on your spending. Others offer rewards such as shopping loyalty points or airmiles. The more you spend, the more you’ll earn but most of these cards charge high rates of interest so it’s vital you repay the balance in full each month.

  • To build a credit score – If you need to improve your credit rating, using a credit card sensibly can help you to boost it. Once your credit score has increased, you’ll be able to qualify for better deals, lower rates and a higher credit limit.

  • If you need to protect your purchase pros and cons of debit cards vs credit cards If you’re buying something between £100 and £30,000, you’ll get more protection if you use your credit card. Your credit card provider is jointly liable with the supplier for any faulty or substandard purchases. If the supplier goes out of business and you can’t get your money back from them, contact your credit card provider.

Fraud protection - If your credit card is used for fraud, you won't usually be liable for any unauthorised payments, providing you contact your provider as soon as you spot the transactions. Note that if your card is lost or stolen, you may be liable for the first £50 and if you’ve been negligent, you may not get the money back at all.

Remember that withdrawing cash using your credit card is extremely expensive. Read more about whether you should withdraw cash using your credit card.

Find the best credit card for you, whether you're looking for 0% card for balance transfers or purchases or day to day spending and rewards

Источник: https://www.money.co.uk/guides/when-to-use-your-credit-card-or-debit-card.htm

Pros and cons of debit cards vs credit cards -

The Pros and Cons of Credit vs. Debit Cards

Nearly 70% of millennials prefer debit to credit cards, according to a 2015 report from Chime, and Transunion reports they have fewer bank-issued and private label cards than older generations.

It’s understandable that they might be wary—credit card debt is a serious problem in the U.S., and it’s hard to dig yourself out of once you fall into it. The credit industry is incredibly opaque and predatory. But a credit card is also an important tool that, when used responsibly, can help better your financial situation over the course of your life.

Here are some things to keep in mind about the differences between debit and credit cards.

Image for article titled The Pros and Cons of Credit vs. Debit Cards

Debit Cards

Pros:

  • Money is taken out automatically, so it can make day-to-day spending more transparent.
  • You can set up automatic transfers to your savings account.
  • You can withdraw cash from an ATM or other vendor.
  • Spending doesn’t affect your credit score.

Cons:

  • It’s less secure than a credit card, especially for online purchases. Issuers refund fraudulent credit purchases much more quickly than debit purchases.
  • If your card is stolen and it takes you “more than 2 business days after you learn about the loss or theft, but less than 60 calendar days after your statement is sent to you,” to report the theft, you could be liable for up to $500 in fraudulent charges.
  • You can overdraft and have to pay the corresponding fee (the average is $33.38, per Bankrate).
  • Spending can’t improve your credit score.
Image for article titled The Pros and Cons of Credit vs. Debit Cards

Credit Cards

Pros:

  • Points, rewards, and cash-back add value to money you’d already be spending, and all the different types—travel, cashback, etc.—let you prioritize what matters to you.
  • More secure than a debit card, especially for online shopping. The most you’re liable for is $50 after you report it stolen, thanks to the Fair Credit Billing Act (FCBA), and some companies will waive that.
  • Easier to get refunds if your card is stolen.
  • Can be used to build up credit score to help with borrowing—your payment history is the most important component of your FICO score (it accounts for 35%), but the length of your credit history (i.e. how long you’ve had a card) is also considered. This can save you thousands of dollars in lower interest rates when you’re borrowing for a house or car over the course of your life.

Cons:

  • Easy to fall into debt if you overspend: The average household with credit card debt has balances of $16,883, according to NerdWallet.
  • Difficult to compare and contrast every single type of card and how it can help (or hurt) you.
  • Can hurt your credit score if you’re not careful with your spending.
  • Many people are not knowledgeable about how to maximize their score, pay off their debt, or even what their interest rate is or how it works.

Personal Finance

Источник: https://lifehacker.com/pros-and-cons-of-using-debit-vs-credit-cards-1821128501

Credit, charge, ATM, and debit cards are not all alike. Here's some information to help you choose wisely.

Credit cards, charge cards, ATM cards, and debit cards are all ways to make purchases or get cash. But each one works differently—and these differences are important.

In order to use these cards wisely, you should know what each one is and how it differs from the others.

Credit Cards

The way credit cards work is fairly straightforward: The credit card issuer gives you a card. You use the card to pay for items and services up to a certain total amount—your credit limit. The store merchant or service provider collects what you owe from the card issuer, whom you repay. (Get information about getting a credit card if you have bad credit.)

Carrying a balance. If you carry a balance, credit cards function like very expensive loans. The credit card company allows you to pay off what you owe little by little each month, as long as you pay a minimum amount each time. In exchange, you pay interest on the balance you owe (as high as 29% each year) at the end of each period. (Read about how to dispute a billing error on your debit or credit card statement.)

How credit card companies make money. Credit card companies earn high fees in several ways.

  • High rates of interest—interest on credit cards accounts for the bulk of the profits earned by banks that issue credit cards.
  • Annual fees.
  • Late fees, over-the-limit fees, and other miscellaneous charges.
  • Charging merchants and service providers a fee each time a customer uses the company's credit card in the merchant's establishment.

The federal Credit CARD Act of 2009. President Obama signed the Credit Card Accountability and Disclosure Act of 2009 (the Credit CARD Act) into law on May 22, 2009. The law provides additional protections to consumers, including better disclosures of account terms, limits on interest rate hikes, and restrictions on certain billing practices and fees.

(If you're in the market for a new credit card, read Choosing a Credit Card: What You Need to Know.)

Charge Cards

Charge cards, also called travel and entertainment cards, are a little different from credit cards. Charge cards, such as American Express and Diners Club, have no credit limit. You can usually charge as much as you want, but are required to pay off your entire balance when your bill arrives.

You cannot carry a balance. With most charge cards, you're required to pay off the entire balance when your bill arrives. If you don't, you'll owe a late fee. If you don't pay the amount due for two billing periods in a row, you'll typically have to pay a heftier late fee of around $35 or a percentage of the past due amount (typically around 2 to 3%), whichever is greater. Also, the creditor can cancel the card once you default. Some charge cards give you the option to pay a bill off over time. If you choose to do this, you'll accrue interest on any charges you pay over time and face a penalty APR if you don't keep up with the minimum payment amounts.

How charge card companies make money. Charge card companies make their profits by charging high annual fees -- up to about $90—and by charging merchants relatively high fees each time a customer pays using the company's charge card. Some merchants don't accept charge cards for this very reason.

Cash Advances

Many people use their credit cards to obtain cash advances. Similarly, many credit card issuers send cardholders "convenience" checks they can use to pay for goods or services. The amount of the check appears on your credit card statement as a charge, but is generally treated as a cash advance.

Cash advances are more expensive than standard credit card charges and have more onerous terms for consumers, including:

  • Transaction fees. Most banks charge a transaction fee of up to 4 to 6% for taking a cash advance.
  • No grace period. Most banks charge interest from the day the cash advance is posted, even if you pay it back in full as soon as your bill comes.
  • Higher interest rates. The interest rate is often substantially higher on cash advances that it is on ordinary credit card charges.

ATM Cards

ATM cards are issued by banks, essentially to give bank customers flexibility in their banking hours. In most areas, you can use an ATM card to withdraw money, make deposits, transfer money between accounts, find out your balance, get a cash advance, and even make loan payments at all hours of the day or night.

Debit Cards

Debit cards combine the functions of ATM cards and checks. When you pay with a debit card, the money is automatically deducted from your checking account.

Combo ATM/debit cards. Many banks issue a combined ATM/debit card that looks just like a credit card and can be used wherever credit cards are accepted. But don't be mistaken—they're not credit cards. The money you spend comes out of your checking account immediately.

Pros of debit cards. Many people prefer debit cards over checks for two reasons:

  • you don't have to carry your checkbook and present identification, and
  • you pay your bills immediately, unlike when you use a credit card and get the bill later.

Cons of debit cards. There are disadvantages to using debit cards.

  • Payment is immediate. Many people prefer having 20-25 days to pay their credit card bills.
  • No right to withhold payment. Because the money is immediately transferred, consumers using debit cards don't have the right to withhold payment in the event of a dispute with the merchant over the goods or services purchased.
  • Transaction fees. Some banks and merchants charge transaction fees for using debit cards.
  • High risks if stolen. If your debit card number is stolen during an online purchase, the thief may drain your bank account before you notice it's gone. (Learn about your liability for unauthorized credit and debit card charges.)

For a comprehensive discussion of credit and debit cards, along with information about budgeting and dealing with debt collectors, get Nolo's Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Amy Loftsgordon and Cara O'Neill.

Источник: https://www.nolo.com/legal-encyclopedia/different-types-of-credit-debit-29810.html

A very long time ago, I wrote an extremely brief article covering the difference between charge cards and credit cards. That article really didn’t answer the question, though, because I still have conversations and receive emails where people use the phrases “charge card” and “credit card” interchangeably.

Along those same lines, Tim writes in recently:

Am I better off using a charge card or a credit card for buying stuff?

At first, I just assumed that Tim had replaced “credit card” with “charge card” in his vocabulary and I began to answer that question, but then I realized that it’s worthwhile to distinguish between all three types of cards and their advantages and disadvantages. So let’s go through them one by one.

Credit Cards

A credit card is borrowed money. When a company issues you a credit card, you’re given a specific credit limit – the maximum amount you can borrow from the company. Each time you use the card, you borrow some amount from that company, and each month, you’re required to pay back a portion of that amount to the company. Mastercard, Visa, and Discover are the major types of credit cards.

Advantages of a Credit Card

The biggest advantage of a credit card is the flexibility. You can make purchases without actually having the cash on hand at the moment. You also have an indefinite amount of time to pay back that money, though you do have to make a minimum payment each month on what you owe. Many credit cards also have rewards programs, which return to you 2-3% of your purchase price in some form or another – often in the form of gift certificates or rewards programs. Also, good credit card use helps you to build a good credit report, which can save you money on insurance and help you with loans. Consumer protection with credit cards is usually pretty strong, too – they’ll often help you deal with fraudulent purchases and don’t leave you out to dry if you lose the card.

Disadvantages of a Credit Card

The big disadvantage is that all the flexibility is a double-edged sword. The ease of use of credit cards and the lack of pressure to pay off what you owe makes it very easy to make poor purchasing decisions. Then, when you can’t pay off the card, you usually pay a hefty amount of interest on that unpaid amount – and over a long period, that interest can be incredibly costly.

Debit Cards

A debit card, on the other hand, is linked to your checking or savings account. Each time you use the card, money is automatically taken from your checking or savings account to cover the purchase. Many debit cards have the same purchasing flexibility as credit cards, as many are accepted where Visa and Mastercard are.

Advantages of a Debit Card

You can’t get into debt trouble with a debit card. It does not allow you to buy things that you don’t have the money for. For people struggling with debt, this is a huge advantage because it keeps you out of trouble. Plus, they’re flexible and convenient for day-to-day purchases. You also don’t have to have good credit to get a debit card – you often get one with your checking account.

Disadvantages of a Debit Card

The biggest disadvantage is that you have to keep a very close eye on your account balances, because you can overdraft your account if you’re not careful. Another disadvantage is that very few debit cards have rewards programs of any kind. Debit cards often don’t have the same consumer protections that credit cards and charge cards have – if your card is stolen, your protection against unauthorized purchases can be weak.

Charge Cards

Charge cards are often confused with credit cards, but they actually function in a fairly different fashion. Like credit cards, charge cards extend credit to you from the issuer, but you’re required to pay the full balance at the end of the month. Some charge cards also have an annual membership fee. Charge cards are typically associated with American Express; many store chains often issue their own charge cards as well which can only be used at that store.

Advantages of a Charge Card

You don’t have to have the money on hand for a purchase with a charge card, nor do you run the risk of carrying a balance that will charge you interest. Many charge cards have tremendous bonus programs that go from things like 5% cash back to free companion flights on airlines – their bonus programs are typically better than bonus programs for credit cards. Charge cards often come with additional services and benefits, like free roadside assistance, free food at airports, and free hotel room upgrades. They also help your credit much as a credit card does. Most charge cards offer strong consumer protection as well, similar to that of credit cards.

Disadvantages of a Charge Card

Some charge cards have an annual fee which eats away at the benefits from using it. Also, since you are operating on credit, there is some risk that you might build up a large balance on the card that will be difficult to pay off. Many charge cards are usually pretty strict in terms of who they’re issued to – you need to have good credit before even getting one.

Charge Card vs Credit Card vs Debit Card: Which One Is Right For Me?

Many people wish to avoid credit at all costs because of the risk of debt – in that case, a debit card is obviously the right choice. If you’re seeing a great debit card (preferably one that has some semblance of a rewards program), you should investigate all of the checking options available at your local bank and also perhaps do some shopping for a new bank, particularly if you’re unhappy with your current bank for some reason.

I tend to believe that it’s worthwhile for everyone to apply for at least a single credit card and use it irregularly. It provides a very easy way to build a positive credit report and gives you some flexibility in purchasing. If you have a good rewards card (for example, I use my Citi Driver’s Edge card for all gas purchases), you can also earn multiple percentage points back in rewards.

If you have excellent credit, have a strong policy of paying your balances back in full each month on your credit card, and travel a bit, it’s worth examining some of the charge card offers available to you, particularly if you’re running a small business. Typically, one can get a big net benefit from a good charge card, but you have to be aware of the benefits alloted to you by that card. Plus, you can’t get into revolving debt trouble with a charge card since you have to pay the balance in full each month. I know at least one small business owner who makes a killing with his charge card, getting tons of free flights, free airport foods, discounts on rental cars, roadside assistance, free hotel rooms, business advice, and so on, but those are rewards that others may have difficulty maximizing.

My suggestion, if you’ve never owned a card, is to get a good checking account (I use Capital One 360 as my primary checking and I’m happy with them) and use their debit card for most purchases. At the same time, get a credit card, use it for only a few purchases, and leave the card at home so you’re not tempted to use it. This allows you to start building healthy credit without the debt risks of a credit card.

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view our disclosures, click here. Opinions expressed here are the author’s alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser’s page for terms & conditions.

Please, readers, fill in additional details you see as important – many more people than just Tim will find use with this information.

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

Источник: https://www.thesimpledollar.com/credit-cards/personal-finance-101-charge-cards-versus-debit-cards-versus-credit-cards-pros-and-cons/

Debit vs. Credit Cards for Small Business Owners

Managing a small business with cash only can be a dangerous proposal. It can be unsafe to carry large amounts of cash to make payments and buy things you need for your business, and a daily trip to the bank with loads of cash can be cumbersome.

Having a business debit card and a business credit card can make paying everyday small business expenses a lot easier. There are pros and cons to each, and it’s important for business owners to realize that some of the consumer protections they have as individuals don’t necessarily apply to businesses.

Debit Cards
A debit card accesses a checking account, just as a check does, and pulls money out of the account for the transaction. It doesn’t incur debt as a credit card does. Unfortunately for small business owners, they have less protections under federal law than consumers do with debit cards. Consumers with debit cards have limited liability if the card is lost or stolen, but business account holders don’t.

Business debit card owners should understand their bank account agreement on liability for unauthorized transactions. The Business Debit Mastercard® through Rockland Trust comes with all business checking accounts and can be used anywhere Mastercard is accepted.

It offers zero liability to protect from unauthorized signature-based transactions; purchase insurance up to $1,000 from damage, theft or loss for up to 90 days; extended warranty coverage for one year; and reimbursement for rental car damage or theft if an eligible card is used.

The debit card also offers perks from Mastercard, including emergency roadside assistance, travel assistance, and refunding value-added taxes paid during foreign travel for business.

Credit Cards
For small business owners paying for everyday expenses such as office supplies all the way up to business travel, a credit card can make more sense. A credit card allows you to defer payment until the balance is due, and you don’t have to have the charge amount available in a checking account, for example, as you would to pay a debit transaction.

You’re using the credit card issuer’s money until you pay off the balance, so you could incur fees and interest charges if the bill isn’t paid on time. Paying the bill on time will also improve your company’s credit record. A credit card may also offer rewards that a small business owner can use, even if their employees use the card for business expenses.

There are different types of credit cards. One type is issued mainly for consumer use, such as personal or family use, though it can occasionally be used for business purposes. Another type of credit card is used primarily for business use, though it can be used for the occasional personal purchase.

Rockland Trust offers small business owners a Platinum Visa Business Credit Card that has many benefits, including reward points, travel rewards, multiple layers of security, auto rental collision damage waiver, travel and emergency assistance services, and small business online workshops.

Protections
The federal Truth in Lending Act, or TILA, offers credit card protections for consumers, but not for business credit cards. These include limits on penalty fees for late payments and over-the-limit fees. Some card issuers may voluntarily extend some consumer protections to business cardholders, but they’re not required to, according to the Federal Deposit
Insurance Corporation (FDIC).

If a thief uses a stolen business credit card, the liability for unauthorized use can be higher than it would for consumer cards. TILA limits a consumer’s liability to generally no more than $50. But if a company has 10 or more credit cards for employee use, the business may be required to assume unlimited liability for unauthorized transactions, according to the FDIC.

If fewer than 10 credit cards are issued by the company, the $50 limit will apply for unauthorized use by someone other than an employee. If the employee is the culprit, TILA rules set no restriction on the potential liability for the employee or business.

CONTACT A SPECIALIST

Источник: https://www.rocklandtrust.com/learning-center/financial-education/debit-vs-credit-cards-for-small-business-owners

Debit vs. credit: The basics

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Whether you have a debit card, a credit card or both, you can get yourself into some serious financial trouble without a good understanding of how each one works and the differences between the two.

The two cards may seem pretty similar — both plastic, both have your name and a bunch of numbers, and both can be used almost anywhere — but that’s about as far as the similarities go.

In fact, debit and credit cards are two very different things. It’s crucial that you understand how each card works, so you can make the best decisions regarding how and when to use each one. Although you may already know some things, there are a lot of lesser-known perks and dangers that come with both debit and credit cards.

This guide takes you through the basics of how each card works, the pros and cons, and a few other things you need to know in order to control and protect your money!

And remember, you don’t have to be a financial pro — you just need to have the right information and a little common cents!

A lot of people stick with a debit card as a way to control their spending and avoid racking up big credit card debt because you can’t spend what you don’t have with a debit card. In the aftermath of the Great Recession, this strategy became a very popular one as many people were forced to rethink their spending routine.

But debit cards are full of hidden dangers — and what’s confusing is that these dangers are often the same features that make them an appealing alternative to credit cards.

So let’s take a look at how each card works.

Debit cards

  • A debit card is linked to your checking account.
  • Any time you make a purchase, the money comes directly out of your account.
  • Because the card is linked to your checking account, you can only spend whatever money you have in your account.

Credit cards

  • When you swipe a credit card, you’re spending someone else’s money — money the bank or credit card company has given you access to.
  • And that money isn’t free — when the bank agreed to lend you the money, you agreed to pay a fee for it in the form of interest.
  • So if you charge a bunch of stuff on a credit card and pay the bill in full before it’s due, you don’t pay any interest — because that would mean the bank got all of its money back.
  • When you don’t pay the bill in full, meaning you start the next month with a balance on the card, you will be charged interest, which is added to the total balance.

Now that you have a basic understanding of how debit and credit cards work, it’s important to know the pros and cons of each.
But just a heads up, even though certain features are considered pros, there may be cons that cancel them out.

Pros of debit cards

  • A debit card is linked to your bank account, so you can only spend what you have. This is what makes debit cards appealing for a lot of people, since that restriction can help you control your spending.
  • You can use it pretty much anywhere.
  • Since the money comes right out of your account, you know how much you have left for the month.
  • You can get cash with a debit card — so if you need actual paper money, you can use your debit card at an ATM or to get cash back at a store.
  • And with debit cards, you don’t pay interest on the money you spend — since it’s your money.

Pros of credit cards

  • You can use a credit card pretty much anywhere.
  • A credit card can give you immediate access to money you may not have in your checking account, like if you need to cover something you can pay back with your next paycheck. Just make sure you can pay it back before the bill is due.
  • Using a credit card for emergencies is not ideal (which is why you need emergency savings), but it can be a last resort if you’re really in a bind,
  • On the same note, a credit card also gives you flexibility. You shouldn’t go crazy, but as long as you can pay off the balance in full before the due date, you won’t be charged any interest, and that can give you some flexibility throughout the month and between paychecks.
  • One of the biggest benefits of a credit card is that it can help you build credit — as long as you use it responsibly.
    • If you pay your bills in full and on time each month, those on-time payments help improve your credit score, which can get you lower interest rates down the road on things like a car loan or mortgage.
    • Basically, making on-time payments gets lenders to trust you more — so you always want to pay the bill in full and on time each month.
  • Credit cards also come with rewards, which vary based on the card. Some examples are cash back, airline miles, discounts, additional insurance coverage and more. There are tons of different rewards programs out there. Some even offer additional warranties or insurance coverage on certain purchases, like cell phones.
  • One of the best features of credit cards is the protections they offer, which are much better than those offered on debit cards.
    • If your credit card number is stolen, but not the physical card, “you are not responsible for unauthorized charges under federal law,” according to the Consumer Financial Protection Bureau.
    • If the actual card is stolen, you are liable for no more than $50 in authorized charges — as long as you report it to your card issuer. Some issuers won’t even charge you the $50.
    • Also, when someone makes fraudulent charges on your credit card, no money actually leaves your hands. So while you get it straightened out, you aren’t stuck with a huge chunk of your cash missing ‘ like you are when debit card fraud occurs.

Cons of debit cards

This is where you’ll see how some of the pros of debit cards can easily become cons if you aren’t careful.

  • Debit cards can actually be riskier than carrying cash. It’s not great if someone steals your cash, but since your debit card is linked to your bank account, if someone steals your card, they could get access to every cent in your bank account.
  • Because you can only spend what’s in your account, that really limits your overall spending ability.
  • Fees: Although there typically aren’t fees associated with a checking account (besides overdraft fees), there are several fees you could face with a debit card depending on how you use it. (If you are paying an annual fee for your checking account, it’s time to shop for a new one!) Here are some common fees people face with debit cards:
    • Foreign transaction fees: Many banks charge you a fee when you use your debit card to make a purchase or withdraw money abroad.
    • ATM fees: Many banks also charge you a fee to withdraw money from an ATM that’s not affiliated with your bank.
    • Overdraft: If you overdraw your account, you’ll be charged a fee.
    • Keep in mind that specific fees will vary depending on your bank and your card.
  • Another downside to debit cards is that they don’t help you build credit, like credit cards do — and building a good credit history of on-time payments is important for your overall credit and credit score — especially when it comes time to get a big loan for something like a car or house.
    • If you report the card as lost or stolen within two business days, you won’t be responsible for more than $50 of unauthorized transactions.
    • If someone uses your physical ATM or debit card without your permission (meaning it was stolen) and you report the fraudulent charges within 60 days after your statement is mailed to you, you could lose as much as, but no more than, $500.
    • If someone uses your card number to make a fraudulent charge, but your card or PIN has not been lost or stolen, under federal law you will not be liable for the transaction if you report it within 60 days after your account statement is sent to you.
    • If someone uses your ATM or debit card without your permission and you don’t report it within 60 days after your statement is mailed to you, the potential damage is unlimited. You could lose all the money in that account, the unused portion of your maximum line of credit established for overdrafts, and even more.
    • A lot of banks do now issue what’s called a “zero-liablity” policy with some debit cards — which is meant to give you more protections. But, there are a lot of exceptions to those policies so you have to be careful and make sure you understand the details of the specific policy (which can get complicated). The biggest downside to debit cards is the lack of protections they offer for you as a consumer. Here’s a closer look:

Cons of credit cards

  • If you have a hard time controlling your spending, a credit card can get you into big trouble fast.
  • If you don’t pay off the balance in full each month before the due date, that’s when people start to fall behind — because when you carry a balance on the card from one month to the next, the interest charges kick in and that money is added to your overall balance.
  • When you’re only paying the required minimum each month, interest charges continues to add up — increasing the total balance even more — because keep in mind, when you only pay the required minimum payment, you still get charged interest. So as interest increases the balance each month, those minimum payments aren’t really even making a dent in getting that total amount paid off. It’ll take you longer to pay off the card and cost you more money over time — making the items you charged on the card a lot more expensive than what you paid for them. That’s when credit card debt can quickly spiral out of control.
  • Fees: Many credit cards come with some type of fee, or fees, so when you’re choosing a card, make sure to look for one with the fewest to no fees.

The best way to take advantage of the benefits of a credit card is to charge only what you know you can pay off at the end of the month. If you’re just starting out and trying to get control of your spending and saving, a credit card can be dangerous — so just be honest with yourself about what you can realistically handle.

Credit card interest example

Here’s an example to give you an idea of why paying off the balance on a credit card each month is so important!

  • The average interest rate on credit cards right now is around 15 percent.
  • Let’s say your credit card balance is $1,000 and you can only pay the minimum payment each month — around $20 to $25.
  • It would take you about 8 years to pay off that $1,000 — assuming you don’t charge anything else on the card — and you’d also pay more than $700 extra in interest.

When you carry a balance on the card from one month to the next, that’s when the interest charges kick in, adding to the total balance. So the longer you keep a balance on the card, the higher it continues to get each month.

When you pay the bill in full, meaning you pay off the entire balance so it’s back at $0, before the due date, you won’t have to pay any interest.

Debit and credit cards come with very different features and protections, and there are some situations when it’s always better to use a credit card.

There are some places where your card number and information are at a much higher risk of getting stolen, and if it’s a debit card, that could mean all the money in your bank account. So when you consider the vastly different fraud protections listed above, using a credit card where fraud is more common can help you protect your money — since again, a credit card comes with much better protections.

Some purchases may require an extra deposit if you use a debit card, which is a way for companies to guarantee payment in case you don’t have the money in your account to cover the charge, so it’s better to use a credit card in those situations. Plus, credit cards often include extra insurance coverage in certain situations, like travel cancellations.

So with all that in mind, here are some places and situations when you should avoid using a debit card if possible:

  • Pay at the pump
  • Shopping online
  • At the supermarket/grocery store
  • At the car rental counter
  • Booking advanced travel
  • When buying furniture and major appliances
  • When setting up automatic drafts and/or recurring bill payments
  • Independent ATMs
  • Restaurants
  • Anywhere you are a new customer
  • Small vendors like those at markets and other places you aren’t familiar with

If you only have a debit card, consider using cash when you can (obviously except for ATMs).

And if you only have a debit card, here are some ways minimize your risks:

  • Only use bank-affiliated ATMs. They offer a higher level of security, which means they’re less likely to be compromised by scammers. Never use independent ATMs, like those at gas stations or in other less-monitored areas.
  • When using an ATM, cover the keypad when entering your information — a criminal could be watching.
  • Don’t share your debit card PIN, don’t write it on the card and don’t write it down anywhere that someone could see it.
  • Always sign for debit-card transactions when possible.
  • If there’s a “tip” field/line on a receipt that doesn’t require a tip, or you aren’t giving a tip, take the extra precaution of writing in $0.00 on that line and also write in the total.

More ways to prevent and protect against fraud

  • Check your accounts and statements EVERY SINGLE DAY. The quicker you recognize a fraudulent charge, the better chance you have of resolving it and getting your money back.
  • Report any fraudulent transactions immediately.
  • Don’t pay any bill associated with fraudulent charges.
  • Never share your banking or other personal/sensitive information via email, text or phone (unless you call the bank directly). Even if the email or text looks legitimate (showing the bank’s logo etc.) it could very easily be a scam! Any time someone reaches out to you asking for personal or sensitive information, don’t give it to them right away. Instead, hang up or delete the email or text, and then contact the company directly — either by phone or by visiting their legitimate website directly.

RELATED: A credit freeze is the #1 best way to protect against identity theft

Prepaid cards have become an increasingly popular option for people who want to control their spending without worrying about the risks associated with debit cards.

Here’s how it works: you load money onto the card and use it like a debit card, since you’re spending your own money. But what makes prepaid cards different is that they are not associated with a bank account (like a debit card is).

They’re different from credit cards because there is no credit involved — you load your own money onto the card and you spend your own money. When the balance gets low, you just put more money on there.

Prepaid cards are typically accepted anywhere you can use a debit card. Some will let you pay bills online, set up automatic monthly payments and even get cash out of an ATM. There are also more options now for reloading prepaid cards — transfer money from the bank, link your paycheck via direct deposit, transfer money from PayPal or reload it at a local retailer like Wal-Mart.

Prepaid cards aren’t tied to a bank account, so you don’t risk losing all of your money in case of fraud. And because you can only spend what’s available on the card, you don’t risk racking up big credit card debt.

One of the disadvantages of prepaid cards is that, like debit cards, they do nothing to help you build credit. Plus, prepaid cards often come with a lot of fees, so you have to be careful and make sure you do your research before choosing one.

There are a few things to consider when you’re trying to decide whether you’re ready for a credit card, or if you should just stick with debit or a prepaid card.

If you have a credit card, you’ll still have a debit card as an option if you have a bank account.

So the first thing you need to figure out is whether you think you can use a credit card responsibly — and it’s crucial to be honest with yourself! Consider your spending habits and behaviors.

If you know you can control your spending, using a credit card can be very beneficial for your financial life. It will offer you better protections, help you build credit and earn you rewards at the same time. But the only way to make a credit card work in your favor is to use it responsibly.

Only charge on the card what you know you can pay off before the due date. That way you don’t risk interest charges adding up and increasing the total balance, which is when credit card debt can start to spiral out of control.

If you get to a point when you can’t pay the bill in full, pay as much as you can (to get the balance down) and always make sure to pay it on time. Late and missed payments can have a detrimental impact on your credit score — and for a very long time.

One other thing to remember: the amount of your total available credit that you use also has a big impact on your credit score — and you never want to use more than 30% of what’s available to you.

Let’s say you have a credit card with a $10,000 limit. If you’re carrying a balance month-to-month of $3,000, you’re only using 30% of the total limit. But if your credit limit is suddenly dropped to $3,000, then you’re using 100% of what’s available to you. That’s another reason to always pay down credit card debt as quickly as possible — you always want to make sure that your credit utilization rate is 30 percent or less.

Check out our Credit Reports & Credit Scores Guide for more on understanding your credit what factors impact it most.

If you’re just starting to budget and trying to get a handle on your spending and saving, a credit card may be too tempting for you.
This is when you really need to think about your own personal behaviors, because getting into debt is a whole lot easier than getting out. And telling yourself that you can always pay it off later can get you into a lot more trouble than you realize — trouble that can follow you around for years, even decades.

If you decide you aren’t ready for a credit card, consider the different features of debit and prepaid cards.

A prepaid card can help you control your spending and you avoid the risks associated with debit cards. If you’re trying to develop better habits, use it as a budgeting tool. Only load onto the card the amount of money you truly need — then keep the rest of your money in savings.

If you stick with a debit card, make sure to take all the precautions listed above to minimize your risk of fraud and identity theft. If you’re trying to get control of your budget, try using cash or setting up separate checking/savings accounts for different areas of the budget. By keeping your money separate, you limit the potential damage if your card or card number is stolen, and it’s also a good way to get you into better budgeting habits.

For more on how to create, maintain and stick to a budget, see our Budgeting Guide.

More tips on what you need to know about personal banking!

Welcome bonuses can be a great way to boost the value of a credit card.Best Credit Card Welcome Bonuses for 2021-If you're in the market for a new credit card, you may be hoping to cash in on the hundreds of dollars in signup bonuses offered to new customers. Welcome bonuses and offers are a marketing tool that credit card…
Источник: https://clark.com/commoncents/debit-vs-credit-pros-cons-protections-money/

5 Key Advantages to Purchasing With a Debit Card

Almost every single person out there has a debit card they use these days, but not everyone realizes the benefits that come with having one.

Although swiping a debit card has become second hand to most, it's important to understand when it’s best to use one over cash, checks, or credit cards, and why.

woman making debit purchase online

Most debit cards function on a fundamental level. They’re issued by banks so that cardholders can easily and quickly move money from one bank account to another electronically. When making a purchase, money is withdrawn directly from the cardholder's bank account, and is deducted. Debit cards function as an ATM card (so that you can take out cash instantly) or as a check so that when a purchase is made, money is deducted from the cardholder's account immediately. Seacoast Bank’s Visa® Debit Card, provides additional benefits that come from the association with Visa®, such as compatibility with Visa Checkout and Apple Pay™. Here’s five more reasons why using a debit card is your next best life decision.

Using a Debit Card is Convenient and Safe

Many card users enjoy the convenience of their checking accounts thanks to the ease and convenience of debit cards these days. Just swipe your card or hand it to the cashier. You'll skip trips to the ATM, and you can leave your checkbook at home. Using a paper checkbook is becoming more and more outdated, and many retailers won't even accept checks. Plus, a debit card can help speed through any checkout process—all without the need to carry change, write a check, or stop at the ATM.

A Mobile Wallet Gives You More Options for Convenience

Several individuals believe you need a credit card to make certain purchases, like shopping online, renting a car, or having an emergency fund. With debit, you can spend the money you already have. When renting a car, for instance, the car rental company will put a small hold on your card that will be released once the car is returned without damages.

It's also safer to use debit cards, rather than carry around cash, which can easily get stolen or lost. There’s an extra layer of security with debit cards like the chip, pin, and online banking access that allow you to track transactions right from your phone.

Get the latest updates, offers and helpful financial tips.

Sometimes, You're Just Not in a Position to Touch Your Credit

The main reason why people use credit cards over debit cards is because they need to borrow money they don’t have in their checking account or they’re trying to build their credit. Debit can be a great idea if you know you’re going over the 30% recommended credit amount from your credit line or if you know that you usually find yourself painfully close to maxing out your credit card each month.

With a debit card, you’re able to track your purchases in real-time because transactions take money directly out of your bank account immediately, unlike credit cards which provide monthly statements. This can make purchases easy to forget, until your payment due date or when you catch it online. If you don’t have your credit under control, interest will accrue which can get you in debt quickly. If you’re not good at using credit, or you’re new to it, getting an idea of what your income and expenses are is more transparent with your debit card. Plus, it’s always empowering to know you don’t have to keep borrowing money or falling deeper into debt.

Additionally, you don't need a credit card to build your credit. By simply paying your bills on time, like rent and utilities, you'll build enough credit over the years to quality for big life expenses like a home loan.

Debit Can Help You Really Stick to Your Budget

You might be one of those buttoned-up characters who don’t have a problem with spending and can pay off your credit card every month. However, knowing you have that extra amount on your credit line can be tempting for anyone—-whether you’re a shopping fiend or just negotiate treating yourself or a love one again (maybe a bit more than you let on). If you’re swipe happy and use your credit card mindlessly, or for a future paycheck, you’re likely making impulse purchases on things you don’t truly need, and more importantly, isn’t included in your budget. There’s no point of making a budget if you’re just going to meddle with it. Use a debit card to train yourself to understand how you’re actually making financial decisions. Avoid paying just the minimum payment on your credit card each month, as your interest charges will quickly snowball. No matter how small, interest on purchases is your hard-earned money lost.

Credit Cards Aren't the Only Cards With Benefits. Reap the Perks of Debit Cards

Many debit cards nowadays also offer special perks. Spending on everyday purchases you know you’ll make anyway, like groceries and gas, is a great way to maintain your debit card and get special offers. Saving money is possible when paying close attention to the various promotions that become available as you make purchases. Seacoast offers different deals and exclusive coupons from your favorite retailers. When using a Seacoast debit card, you get great deals like this:

  • Save $5 on $50 when you shop at Target
  • Receive 20 percent off a 1-hour airboat and gator park combo
  • Get 20 percent off single-day tickets to LEGOLAND Florida Resort

It’s Time to Shop Local

>When it comes to banking local, it's a no brainer. Getting the same simple services, like online bill pay, is a given, plus you'll receive the best rates on interest, savings, and more. Debit cards come with many of the same benefits of credit cards, and less of the disadvantages. Skip annual fees, late payment charges, and foreign transaction fees. Plus, if you're worried about overdrafting your account, you can easily set up an overdraft protection to prevent any mishaps.

Want to learn more about your debit card options? Experience safe and convenient banking with a Seacoast Bank debit card.

Источник: https://www.seacoastbank.com/resource-center/blog/key-advantages-purchasing-with-debit-card

When to Use a Debit Card—and When to Use a Credit Card Instead

That swipe (or tap these days) of plastic can be satisfying when you're making a purchase. But which type of plastic card should you use a debit card or a credit card? A 2020 survey by the Federal Reserve on consumer payment habits found that debit cards were "the most used and the most preferred"—42 percent of the participants said they preferred to pay with a debit card, while 29 percent chose credit card.

But each method has its pros and cons, and knowing when you use each can help you make better choices with your money and earn rewards on purchases. While debit cards do offer protection against fraud and theft, they should be used with caution as they are directly linked to your bank account—keep you PIN safe by being aware of your surroundings at the ATM and try to use it minimally when you're traveling. Check your statements often and report suspicious activity to your bank right away.

"Debit card fraud protections depend heavily on how quickly you report the fraud, and a thief could empty your bank account before you even realize your information or card has been stolen," says Brooklyn Lowery, editorial director at credit card comparison site CardRatings.

While debit cards are very commonly used, there are many instances where using a credit card (responsibly) is beneficial. For one thing, you can't build credit with a debit card, and a good credit score is important for big ticket purchases like buying a house or car.

Here are situations where you can use a debit card and when a credit card might be a better choice—so the next time you're asked "debit or credit?" you can make an informed decision.

Debit Card

Use a debit card if you're trying to control your spending.

You can use a debit card for everyday purchases—especially if you think that using a credit card all the time would lead you to overspend. "I️ suggest using debit cards for your everyday expenses except high-risk situations," says Vanessa Perry, credit expert and owner of Impeccable Credit Services.

It is much easier to track how much money is going in and out on a debit card—chances are, you know how much is in your account and how much you're allowed to spend. If you're not careful, a credit card can enable impulse buying because it gives you access to money you don't have. You can quickly fall into credit card debt and lose money on high interest rates and late payment fees if you don't manage your spending properly. If you're more prone to mindlessly swiping your credit card online or in person, stick to using your debit card.

"Treat your debit card like cash," says Jamilah N. McCluney, financial advisor and specialist at Black Wealth Financial. "Do you have the money in your checking account readily available to cover your purchase? If so, swipe away."

You could also get a charge card, a type of credit card where you have to pay your statement in full every month—this is more similar to a debit card, and will help you stick to spending within your means while helping you build credit.

Use a debit card for withdrawing cash.

This one might seem obvious, but use your debit card to withdraw cash—again, make sure you're aware of your surroundings at the ATM or go to an ATM in a bank to ensure your information is safe. You can use a credit card to withdraw cash, but it requires a cash advance—"a kind of transaction that often comes with a fees as well as a high interest rate," says Lowery. You could also use your debit card at the grocery store and get cash back that way if you can't get to an ATM.

Credit Card

A credit card is safer to use for online shopping.

Use your credit card for online shopping so you don't have your debit card information all over the internet. "Chip-enabled cards are very good at deterring in-person fraud but that doesn't help you online, and that's where most of the fraud has gone," says Ted Rossman senior industry analyst at CreditCards.com. Check your browser and shopping apps to make sure your debit card isn't saved as the preferred payment method and add your credit card instead—or you can delete both to make it harder for you to overspend online.

Use a credit card for any recurring payments.

Any recurring payments you have such as subscription services that renew every month or year like Netflix, Amazon Prime, or Spotify are good to put on your credit card, especially an older one that you no longer use as much.

Recurring payments will keep that line of credit open so you can continue to maintain or increase your credit score—as long as you make payments on time. Make sure you check your credit card statements so you know which subscription services you're being charged for—you can waste a lot of money on subscriptions you no longer use or forgot you signed up for.

Use a credit card in case of an emergency.

Use your credit card when an unexpected expense comes up and you need some time before you can pay it off. "Be sure to repay more than the minimum on your credit card payments to avoid unnecessary interest," says McCluney. This can be emergency expenses while you're traveling, have a flat tire, or other repairs and purchases.

It is OK to use a credit card for everyday purchases that you can pay off.

As long as you use it responsibly, charging everyday purchases to your credit card is perfectly fine—in fact it can be the key to building credit and boosting your credit score. Stay within your credit limit (experts recommend using 30 percent or less each month) and always try to pay your statement off in full.

"I use my credit card for every possible purchase, whether it's a $1 pack of gum at the gas station or a major home improvement with a contractor," says Lowery. "The more I use my rewards cards, the bigger the bank of rewards I have to take my next vacation for free." Many credit cards offer points, travel miles, or cash back on everyday purchases like groceries or gas.

Rewards and all, it's still good to practice budgeting, spending within your means, and paying your bill every month. "Often times people get caught up with the points and travel miles," says Perry. "Although points do save money you have to always pay that amount back."

Bottom line: You can use both your debit and credit cards for everyday purchases depending on your personal preference, but stick to in-person transactions for your debit card to ensure safety. Having both and using each responsibly (and strategically) will help keep your financial life in good shape.

Источник: https://www.realsimple.com/work-life/money/debit-vs-credit-card

: Pros and cons of debit cards vs credit cards

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Pros and cons of debit cards vs credit cards
pros and cons of debit cards vs credit cards

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