The Showdown: Debit Card vs. Credit Card

So we’ve all heard the phrases “credit card” and “debit card”, actually we all probably use one of the above on a daily basis. But how do you go about choosing which to use? For starters, they are NOT the same thing, and after reading this, you will probably choose to think a little more when the cashier at the supermarket asks you “credit or debit?”

A debit card is directly linked to a bank account, immediately withdrawing the allotted amount of money spent from that bank account. While a credit card allows the user to make a purchase using money “borrowed” from the card issuer. So which is better? While both have their pros and cons, choosing one or the other can depend on current credit history, personal preference, or even individual personalities. For example, take Mike. Mike is married police officer. His wife is a school teacher at a local school. They have two children in and are in good credit standing. They live on Mike’s salary, while putting most of his wife’s salary away in savings. They rarely ever make big purchases, but have decided to splurge on a new couch for their living room. Should they use a credit card or a debit card? Well, since furniture is not exactly a modest purchase, and the two are in good credit standing and live well on a budget, it is a good idea for them to use a credit card. They are good candidates because it is obvious that they pay their bills on time, and will pay for their new couch over time and interest-free. They might even get some reward points towards that Disney vacation they’ve been saving up for! Sometimes it is essential to use a credit card. Find out five purchases you should use a credit card for. *Checking your credit report is important when deciding whether to use credit or debit. Read our blog post to find out more about credit reports and how to get a FREE (no strings attached) credit report. Now, take Paris. Paris is a recent college graduate. Since she has only landed a part-time job, she has deferred her student loan payments and is living in her parents’ house in order to save the little money she is making.Paris has developed a knack for online shopping. She planned to allow herself one purchase per month from her favorite online boutique, but she can’t seem to limit herself. She decided this month to purchase a new handbag. Should she use a debit card or credit card for her purchase? Since Paris is not exactly in a good credit standing due to outstanding loan payments, and is not exactly good at budgeting her income, it’s best for her to use her debit card. This will prevent her from overspending money, yet will allow her to purchase online easily. In other words If you’re good at paying your bills on time, and living on a budget, use your credit card for big purchases. On the other hand, if you find it difficult to live on a budget, and often find yourself overspending, a debit card is a good way to help save yourself from further debt. Still not sure what to use?’ Check out this article from USA Today about the pros and cons of credit and debit cards. Comment and let us know what you use credit or debit for!

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