The Case for the Debit Card
Below is a sponsored post with some good points.
You may think that a debit card has nothing to offer you. After all there is not the protection afforded to you when you buy with a credit card and you are not getting any credit or a credit history that can help you in your future financial dealings. However consider this! The level of credit card debt in the USA averages over $5,000 per person and over $15,000 on those cards that carry a balance forward every month. That is expensive debt because of the high rate of interest that credit card companies charge each month. It is sheer waste and suggests that too few Americans are in control of their finances. Perhaps this calls into question credit cards that although convenient, are extremely dangerous? So why would you choose a debit card over a credit card?
Credit cards are just that. You can use them up to an agreed limit to buy the things that you cannot currently afford without waiting until you have saved up. If there is a mistake on the subsequent statement then you can dispute it and you are insured against a problem that might arise. Loss is capped at $50 on a credit card.
Certainly if you are subject to fraud on a debit card then the fraudster has direct access to your checking account which is tied to your debit card and there is no insurance protection. However you can alert your bank and if you are really concerned why not change your account details and get a new card? Your bank should be happy to assist with this and comply with your instructions. There is nothing left for the fraudster to collect.
The level of credit card debt suggests that users lack the self-discipline to keep their spending under control; with a debit card you have no choice because you are using your own money.
Conclusion: The fault lies with the use of credit cards but in the absence of self-discipline it is much easier to live by a properly prepared budget using a debit card even though there is a higher risk of fraud.
There may be a delay in your bank returning money that has been taken fraudulently until after they have investigated. However if you have fully understood the terms and conditions that your banks apply you should not lose anything. Your credit card does not expose you in the same way but is that really a reason not to have a debit card and impose good financial management on you?
Conclusion: Unless you are extremely short of money the temporary loss of some should not be a major problem. If the bank values your business and it should if you are displaying a good sense of how you use money it should help.
Promotions and Rewards
Credit card companies regularly offer incentives for their use. You can decide how valuable such things are for you. They are not always something for nothing and sometimes they lead you to spending on something just to accumulate points. If you then pay interest on an increased balance the whole exercise may not make financial sense.
Conclusion: Not a significant reason to carry a credit card.
Balancing the Books
If there is one thing that is clearly lacking in American society it is good money management. How can it possibly be an advantage using a credit card over a debit card in these circumstances? Clearly it is great to have credit but there is a day of reckoning. The high rate of interest on a credit card is a major waste of money. More people who have a regular income should actually pay off any balances with a much cheaper personal loan repayable by installments and then learn self-discipline overnight. A credit card provides up to 30 days credit then the statement balance must be paid off in full in the future.
Conclusion: You should judge for yourself whether you can resist temptation before continuing with a credit card. If you are managing your finances well then you may not need credit so arguably a debit card is a good alternative to carrying cash?
If you have no credit history and hence score you can find difficulty in securing online loans especially mortgages, a reason for credit card over debit card?
Conclusion: Really! If you are clearly in major credit card debt you are unlikely to be regarded as a good risk!