Debit Card vs Credit Card and Cash, What’s Better?
It’s no secret that debit cards are seeming to be the most popular forms of payment these days, especially if you are in debt, using a debit card might seem like the best way of payment. However, what you may not know is that debit cards can carry a hefty toll if lost or stolen.
Getting out of debt can be an overwhelming process especially if you are in debt with multiple credit agencies. Experts will say the only infallible way to truly get yourself out of debt is eliminating credit use altogether, but the truth of the matter, is that if you stop using credit cards, using a debit card is your next option aside from cash. Debit cards are very suitable for day-to-day purchases, even so using a debit card could potentially end up becoming more of a headache than falling into debt. NeoCertified recommends that you use either a micro-chip credit card or cash for every day transactions.
More Vulnerable To Fraud
One of the most important reasons NeoCertified recommends NOT using a debit card is that it is more susceptible to fraud than cash or a credit card. If a criminal happens to get their hands on your debit card, they could empty your account in a matter of seconds, and your bank won’t reimburse you until they investigate the situation. On the other hand, if the same thing happens but with your credit card you can actually deny payment for the suspected charges until your bank can further investigate the matter. Also, when using a credit card, you will generally be less liable for fraudulent charges and will typically max out around $50. A debit card could hold you responsible for up to $500 in charges you did not make, and some banks could even hold you completely liable for fraudulent charges committed by pin-based transactions.
Won’t Help With Building Credit
Using just a debit card will also hurt your chances at building credit or rebuilding a low credit score. However, if you are unable to make timely payments on your charge or credit card, using a debit card will be the best choice, so you don’t further damage your credit score.
Keep Track Of Your Account Balance If You Are Going To Use A Debit Card
If you do choose to use a debit card, keeping track of your account balance is vital. Most debit cards will not be declined if you are attempting to purchase an item that is well over the amount you have in your account, and overdraft fees will start to pour in should you overcharge your current account by even just a few dollars. Without an overdraft protection plan in place you could potentially do this multiple times with a substantial fee attached to each overdraft purchase. A credit card also carries a similar consequence, and that is, if you fail to make a payment on time you will be hit with a late fee, and interest fees may apply depending on the credit card you are using. However, if you abide by the universal rules of owning a credit card, interest and late fees won’t be a huge factor. Making payments on time and spending within your budget will help you stay safe from fraud and build your credit.
Guidelines For Using A Debit Card
If you are going to use a debit card it is important that you at least have a set of guidelines to follow so you can stay protected. First off, you will always want to store some funds into a savings account that is linked to your checking account, so you can transfer money should your checking account run into a negative. Regularly monitoring your checking account and keeping a safety net of around $500-$1000 in your account will protect you from getting hit with an unwanted overdraft fee. Lastly, never write your pin down or share it with anybody!
Shop With Cash If You Can
Shopping with cash is also a great way to avoid using a debit card. Not only does it save you money and hassle when traveling but it also helps you to spend less and enjoy your purchases more. Using cash will also eliminate the possibility of identity theft and will help you to stay within a budget. The Debit card vs credit card and cash debate will always fluctuate but only you can decide whats best, just make sure to choose wisely!
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