Debit Cards and Your Credit Record
Forget all about the streets being paved with gold; these days if everyone took their credit cards out of their wallets, they could probably pave the streets with them. Retail stores that never bothered with credit cards now have their own version – even Wal-Mart. Everywhere you go you are asked if you would like to sign up for a new card. You might even get a percentage off your purchase today. Or students on college campuses get free t-shirts and hats just by filling out an application. What a bargain!
Except it doesn’t seem like much of a bargain when you find yourself faced with 5 cards and balances on each one. It helps even less if you have that impulse to buy up everything in the store, or simply tell yourself, “It’s okay, I’ll just put it on my credit card and pay it off later.†A lot of people these days are finding out that there is no later. Or that later is getting farther and farther away. In the last decade, more and more credit counseling services have sprung up to help deal with the increasing debt people get themselves into, with no amount of help from the credit card companies. So what if you are stuck in debt and trying to pay off your balances, what can you do?
In two words: debit card.
If you haven’t heard of the benefit debit cards can offer, you need to start doing a bit of research. Like credit cards, debit cards do come with a certain amount of risk, but as long as you keep the card securely with you and do not allow anyone to glimpse your PIN number, you have just as good a chance as any to be safe. When it comes to your credit record, you will already be working your way toward beating back balances, and getting rid of as many credit cards as possible was probably in the program.
Using a debit card takes care of the concern about toting around large amounts of cash, as well as helps to keep you in check regarding how much you spend. Because debit cards take the money right out of your bank account, you will be less inclined to splurge on those shoes or the extra detailing on your car. It completely takes away the pay later procrastination feeling. What you purchase is paid for right then and there. You can also have the option of prepaid debit cards, again the money is your own as is the limit you put on it. You cannot spend over what you set on the card. Having extra controls on spending habits can help with financial responsibility and remind you that money really doesn’t grow on trees. Knowing that money is leaving your bank account immediately can be a sobering experience, leading you to spend less. All the while, your credit record can have enough time to slowly recover from any previous damage done to it.
Having a debit card in your possession even before you go into debt can be very handy. Using both a card types in conjunction can help you keep your spending habits organized and your credit report bright and spotless. Perhaps you delegate your credit card only for gas use and your debit card for everyday purchases like groceries. You could also decide your credit card is for emergency use only and use your debit card any other way you like. The best part of a debit card is that there is no outside company tacking on interest to what you spend, no balance to concern yourself with, and in general, no way of incurring a large amount of debt. Used wisely (just like any credit card!), a debit card can be a safe choice when it comes to keeping your credit record squeaky clean.