Debit Card vs Credit Card: What's Best for Your Wallet?
Read more about Survey: Many Americans Believe Common Credit Card Myths
“Debit or credit?” It’s question you probably hear about once a week at the checkout line. It’s also a question you should ask yourself before you go shopping. It is important to decide what type of card you want as your everyday, go-to payment option.
We’ve already uncovered the charge card versus credit card mystery, but the debit card versus credit card question remains hanging in the air. What exactly differentiates the two types of cards, and which option is best for your wallet? Here is the information you need to know.
The main identifier of a debit card is that it is linked directly to your checking account; each time you make a transaction with your debit card, the purchase is withdrawn from the funds in your checking account. This means that the financial impact of your purchases is immediate. When deciding between the two types of cards, keep in mind that a debit card:
Credit cards, unlike debit cards, are not immediately paid. Instead, you have the option of paying all or just a portion of the balance each month. Interest is charged on the portion of the balance that is not paid by the end of the grace period. Here are other factors to keep in mind regarding credit cards:
The Bottom Line
As you can see, each type of card has positives and negatives. Perhaps the best solution for most people is to own at least one of each. By having a trusted debit card and credit card option, you’ll be able to responsibly build credit while staying within your monthly budget.
Once you have selected your cards, devise a plan regarding how much you’ll be using each type of card. For example, is the credit card just for large purchases and reservations, or are the card benefits great enough to use it for a majority of your monthly transactions? You can make this decision by weighing fees, rates, rewards, and other card benefits.
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While most Americans haven't been duped by popular credit card myths, some people certainly have.
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