Better Than a Balance
If you use a credit card to make your purchases, you are likely to fall victim to the temptation of relying on your credit, and thereby carrying a balance. Once you do that, you will end up owing interest on every purchase you make from that point on until your pay off the balance. This practice will ultimately make even the best deals far more expensive than they appear.There is a simple way to prevent this. You can use a debit card instead. Although credit cards remain our most frequent choice, more and more consumers are discovering the advantages of debit over credit.
Debit card use has increased recently to one third of the total average for non-cash purchases. Banks are beginning to see the profit potential in the trend, and so they are offering more and more rewards for discovering debit. They are adding frequent-flier and other reward plans to convince you that debit is as good as or better than credit. A debit card is actually just another way of paying cash. When you put down this piece of plastic, you are actually authorizing the merchant to take the payment directly from your checking or other prepaid account. Many ATM cards can now also serve as retail debit cards, making the use of debit even easier. You can use debit cards in most places that accept credit cards. This includes many Internet shopping sites.
There are a number of advantages to debit over credit. For one thing, you are actually spending real dollar this fact helps you to keep purchases in perspective and take into account what you can actually afford. Debit cards actually limit you to the cash you have available. Many debit cards will automatically check your balance before completing a transaction, or you can add overdraft protection to your bank account. Debit cards are also an easy source of cash. If you use your card at a drugstore or supermarket, you can generally ask to add an extra amount to the bill and walk out with cash.
When you use a debit card, you may swipe your card through a machine and then enter a personal identification number, known as your PIN, or you may simply sign a receipt without entering a PIN. In both cases, the payment comes directly out of your account. Debit cards will keep you from adding to your current debt or creating new debt.
When you pay with a debit card, you never risk carrying a balance on which you will owe interest. Many credit card users don’t realize that once they have a balance on a card, they will automatically owe interest on any new purchases from day one. You avoid these expenses when you use a debit card instead.
Perhaps the one drawback is that using a debit card, doesn’t affect your credit history. To build a good credit record and credit score, you will need a credit card or other loan that is paid on time each month. Debit cards may also give you less protection from fraud than credit cards do. This is important to keep in mind when using your debit card. Be certain to keep track of it and carry it in a safe place. Of course, this is good advice no matter what type of plastic payment cards you choose to carry