By Brandi Aurelio In today’s day, the amount of people carrying cash is rapidly decreasing. With that, more and more people are turning to plastic to make their purchases. More specifically, debit and credit cards. But both debit cards and credit cards come with pros and cons. Let’s delve into t...
By Brandi Aurelio
In today’s day, the amount of people carrying cash is rapidly decreasing. With that, more and more people are turning to plastic to make their purchases. More specifically, debit and credit cards. But both debit cards and credit cards come with pros and cons. Let’s delve into the specifics on both.
Think of debit cards like a plastic check. Unlike credit cards, when you swipe your card, the money is taken directly out of your bank account. With credit cards, it is like a loan from the credit card company that you repay at a later date. Your credit line is determined by the company based on your credit history and your income and is used to help you build credit, which you need for pretty much anything these days. Because a debit transaction is coming directly out of your account, you are less likely to overspend than with a credit card where you’ll be making a repayment later. On the other hand, a later repayment might be exactly what you are looking for. Sometimes, with larger purchases, being able to pay that off on a different day could be beneficial if you do not have the funds in your bank account at that time. But credit cards almost always come with a little thing called interest. The company will charge you a certain percentage of interest on what you owe them. Debit cards do not do that.
Credit cards do seem to entice people because of the rewards and benefits that many companies tend to off their users that do not come with using debit cards. Things like a certain percentage of cash back on purchases, points with each purchase, and mileage points could be offered. There could also be a sign up bonus offered, often in the form of cash. That in itself is exciting. Credit cards also offer no holds when being used for things like hotels and car rentals when traveling. Imagine not being able to rent a hotel room for your family because the car rental company placed a large sized hold on your account and there isn’t enough left to cover the room. That is a very real possibility when using your debit card for those purchases. You don’t have to worry about that when using your credit card.
Finally, let’s talk fraud when it comes to both credit and debit cards. With debit cards, fraud can be devastating. If your card falls into the wrong hands, it is your own hard-earned money that they are spending. The Federal Trade Commission says, if you report your card lost or stolen within two days, the maximum loss that you could be responsible for is $50. If you report in after more than two days the maximum loss could be up to $500, and if you report it more than 60 days later you could be responsible for the full amount lost. With credit cards, it is the company’s money that they are spending, not yours. There is limited liability on your end.
Chime Bank has offered these tips to help protect your debit card from fraud. First, don’t share your PIN with anyone. Keep that information to yourself. This includes protecting the PIN pad when entering your PIN number. Review your transactions often. This will help you to notice as soon as something seems off or if there is a purchase on your statement that you know you did not make. Often times your bank will offer fraud alerts. Sign up for these. They can inform you if something seems off with your account and how it is being used. Finally, only carry around the cards you need. That way, if they are lost or stolen you still have backups at home until new ones come in.