Credit Card vs. Debit Card: Week 1 of 2

We all know that having a debit card and having a credit card has perks. Over the next two weeks we will discuss the advantages of both. This week we will look at the advantages of credit cards. Some wonder if it is best to get rid of the credit card completely and just use a debit. Well, the answer is no. You need a credit card in order to build credit. Here are some of the other perks of credit cards.

  • Zero liability. Most credit cards offer zero liability. If your card is stolen and there are unauthorized transactions made, you still have access to your funds while the bank fixes the problem. With a debit, you will receive the money back, but it may take a while.
  • Building up a track record. Like we mentioned earlier, building up a credit history is important. Your credit score is a vital part when it comes time to take out a loan for a car or a home.

As you can see, getting rid of the credit card completely is not the answer. Having both a debit and credit card can come in handy, when used properly. You just need to know when is the best time to use each of these. Making sure you make all payments on time and don’t take advantage of the credit card is also key. Next week we will discuss the perks that come along with a debit card.

Have any tips you would like to share? Let us know below – We’d love to hear!

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5 Comments Add yours

  1. Josh says:

    Although, I am more in favor of debit cards than credit cards, I can see the points you make here. Building credit is very important for your financial future, but I wouldn’t recommend the use of credit cards to college students without proper supervision. With debit cards, younger spenders can learn the true value of money before spending madly. As far as credit cards are concerned, it could allow less responsible people to run them up without even noticing. By doing this, they will be destroying their credit, hindering the main reason they got a credit card in the first place. I believe younger people should be required to take a class before using credit cards.

  2. Grant says:

    While I agree with most of this post, I do think that it is slightly generalized. Yes, you do need to build credit in your life and yes a credit card is a good way to do this. However, if you are not financially able to pay off a credit card that you are trying to build credit with, the end result can be the opposite of what you set out to do. Namely, bad credit. I caution whomever wants to use a credit card to build credit to fist assess their financial situation. Find out how much you can spend and pay off in full at the end of the month. Once you have that number, stick to it and resist temptation to spend more than you can pay off monthly!

  3. Quintin says:

    Also buying electronic products on a credit card can be a good use for credit. Most cards give you a better warranty then the company you are buying from. It also makes the process easier to return on credit.

  4. Teresa says:

    There are many unknown rules and regulations of both credit cards and debit cards that most people are unaware of. These rules, both written and unwritten, are important in making the decision to obtain, use, or abuse credit. While is it important to remain as debt free and stress free as possible, credit is an important part of life in this day and age. Credit determines what you are able to buy, if you are able to finance it, and how much you will pay for it in the end. Credit also can be a factor in a job offer or your ability to obtain certain positions. Credit cards should be obtained as necessary and maintained at a balance 60% less than the maximum. Credit cards are the most dangerous because you may get carried away, debit cards are a little “safer” because you actually can see the money that you are spending. All in all, be wise and responsible with your finances!

  5. Matt says:

    We have been learning about personal money management in a college class and there have been many readings about the dangers of credit cards. As a college student who is just starting to build my credit history, I wonder how much credit cards can really help your credit score. Carrying balances that are over 70% of the card’s limit can actually hurt your credit score. When you carry balances on any credit card from month to month, you incur fees and interest that could be invested in other ways. I wonder how much more those “90 days like cash” or “6 months interest free” offers can help build credit with no out-of-pocket costs for interest, penalties, or fees. Easy-to-use credit cards – wielded freely in a cashless society of young people who need instant gratification – tempt buyers to live, eat, and play beyond their means. Are credit cards really agents of credit-building or simply convenient medium through which we dig ourselves more deeply into debt? I’m not sure that I’m ready to find this out for myself.

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