Should You Get A Credit Card Or A Debit Card?

admin — Wed, 29 Jun 2011 02:04:05 +0000

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

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

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

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

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

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

Article Source: http://EzineArticles.com/6373284

Things to Consider Before Accepting a New Credit Card

admin — Wed, 20 Jan 2010 17:45:59 +0000

It’s becoming increasingly difficult to get by in our society without a credit card – or at the very least, a debit card with a credit card logo. Travel arrangements, restaurant reservations, online business transactions and placing orders by telephone all require the use of a credit card. Here are some things to consider before signing your name to a new credit card application:

Don’t Get Too Many Cards – there is hardly ever a good reason for a person to have a wallet overflowing with multiple credit cards. Typically, you only need one or two credit cards. Be selected and choose cards that will work best for how you use them and pay them back. Too much credit available can lead to bad financial decisions made on a whim, and then unmanageable debts.

Take a Hard Look at Your Spending Habits if You Get A lot of Credit Card Offers – just because you have four credit card offers in your mailbox every day does not mean you can afford more credit cards. In fact, credit card companies tend to target individuals who are most likely to rack up big balances because they know they’ll make the most interest off you.

Don’t Fall For Teaser or Promotional Rates – many credit cards do their best to entice new customers through teaser or promotional rates. These are typically lower than average interest rates on new purchases or balance transfers that apply for a limited time – but then once that time is up, the interest rate shoots up. These are also cards that often send your interest rate skyward if you make a payment late. The permanent interest rate on a credit card is much more important than the temporary promotional offer you get; unless you are using the card to pay off a higher interest account and will have the balance completely paid in full before the promotion ends.

Examine More Than the Interest Rate – while the interest rate on a credit card is an important consideration before accepting a new card, it’s not the only thing that matters. The interest rate actually only matters for people who carry a balance from one month to the next, because if you pay your balance off in full within the stated grace period (typically 20 days), there is no interest charged. Also, when you make a decision for a credit card based solely on the interest rate, you might be very disappointed when the interest rate changes a few months after you get the card. Even “fixed rate” interest cards can adjust their interest rates.

How Does the Credit Card Billing Cycle work - knowing the cards billing method is a good idea. Will the interest be applied to your purchases from the day you use the card, or is there a grace period? How many days do you have between billing cycles to pay off your balance before interest is applied? Know exactly how long this grace period is because your lender is likely to mail the bill out late in the billing period, giving you just a couple days in which you can get your payment out before it falls outside that grace period.

Understand Late Payment Charges and Penalties – Check the credit card terms carefully to understand how late payment charges and penalties are charged to your account if you should make a payment late. See if a late payment will also result in an interest rate hike. Most credit cards apply the late payments and penalties to the card balance, and therefore you end up paying interest on these if you don’t pay the balance of your card off in full before the end of the billing cycle, as well.

Tags: accepting, cards, credit card, debit card, interest rate

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Should You Get A Credit Card Or A Debit Card?

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