6 advantages of using a debit card instead of a credit card – Hometown Station | KHTS FM 98.1 & AM 1220 – Santa Clarita Radio
For many of us it is natural to pull out a credit card and use it to pay for anything and everything; a reflex that we have developed over the years.
However, if you also have a debit card in your wallet or purse, it’s often a better idea to use it for purchases. So why is it worth reducing your credit card usage? Let’s go through the top reasons to rethink your spending habits.
You avoid paying interest
Debit cards do not earn interest because you are of course spending your own money directly from your checking account, rather than effectively borrowing the money from the bank like you do with a credit card.
So if your credit card is subject to high fees, which is likely at the moment, you could save by paying with a debit card instead.
There are no withdrawal fees
While you can withdraw cash from an ATM using a credit card, it’s not a good move as most providers charge extortionate fees for this use, making it harder to stay within a budget.
In the meantime, you can use a debit card to withdraw as much moolah as you want at no extra cost, on top of what the ATM operator might need to cover their own expenses.
You can also bypass the annual fees
While not all credit cards come with annual account fees, there are those that come with additional costs associated with their maintenance. And when you want to invest to build wealth, every penny counts.
However, unless you’ve opted for a specific package that entitles you to other perks and privileges, you won’t have to pay a price for using your credit card year after year. That brings us to:
How to find a debit card that suits your needs
If you want to find the right prepaid card without fees, it’s worth doing an online comparison.
You can also ask friends and family for recommendations, as this will not only help you identify quality providers, but also introduce you to less compelling alternatives that are worth avoiding.
You are encouraged to be more responsible with your money
One of the biggest downsides to credit cards is that it can feel like you’ve been given access to “free” money, to the point where you have to pay back the balance and realize you’ve spent a fortune with no real over it think.
Conversely, when you use a debit card, you have a set amount in your account that you know you can use, and every time you pull it out, you know it’s deducting a portion of the total amount. and brings you closer to zero.
This automatically makes you think better about what you spend your money on. So if you tend to abuse a credit card, this could be the solution to your bad habits.
Better yet, modern banking brands often have impressive mobile apps that track your spending and alert you to any potential problems before they happen. So instead of going nuts with a credit card, a debit card could pave the way to a more secure financial future.
Your credit will not be affected by late payments
Some argue against using debit cards because your bank will charge you for this overdraft when you draw down your overdraft.
Credit cards are arguably much worse, however, as not making a payment affects your credit score and leaves a black mark on your history that affects your ability to borrow later.
Going negative with a debit card, on the other hand, doesn’t do anything to your credit rating. There’s a fine balance to be struck, as using a credit card responsibly builds your credit history. But if you can’t count on being careful with it, the pros won’t outweigh the cons.
You can be sure that your card will be accepted almost everywhere
The credit card market is a bit more diverse when it comes to the payment systems used and the brands involved. The result is that there are some retailers, both online and offline, that only accept certain popular payment options, with the exception of a credit card, which you’re reliant on.
Debit cards don’t charge as much, so if you’re looking to buy something from a brick-and-mortar store or a web-based store, there’s a much higher chance your particular method will be supported.
You can still use both a credit card and a debit card in an efficient and responsible way, but actively balancing this is necessary to avoid some of the problems mentioned above.
It makes sense to make more payments with your debit card when you have enough cash, and you know it will curb your urge to waste.