Credit Or Debit - Which One is Best?
I hear people all the time use the terms "credit card," and
"debit card" in the same breath, but they are actually two very
different things. A credit card is just as it sounds; when you
use it, you are making purchases on credit. But when you use a
debit card, you are extracting money from your bank account to
pay for the purchase.
Let's take a look at each one in depth.
Credit Cards
You may think all credit cards are alike, but just like
fingerprints, they differ greatly. Knowing that, you should shop
around in order to get the best terms that you can find. Some
people pay their credit cards off in full monthly, and if you're
one of those lucky few that can afford to do this, then you
should probably look for a credit card with no annual fee or one
that offers bonuses to their card holders. If you are the type
of person that carries a balance on your credit card, then you
should look for a card that will charge the least amount of
interest.
The bottom line is that you need to take the time to learn the
terms before agreeing to accept the credit card. Here's a short
list of things that you should ask (or read in the terms section
of the paperwork)
* What is the A.P.R or annual percentage rate? Will it change
after a specified period of time? Or is it a fixed rate
* Is there a grace period and how long is the grace period?
(That time between charges and when the interest on those
charges begins to accrue.)
* Do they charge an annual fee? Is so, how much?
* How will your finance charges be accumulated?
* How much are the late fees?
* Will there be a charge if I transfer balances to and from this
account?
* What are the cash advance fees?
* What will happen if I go over my credit limit?
In most stores or businesses, the retailer does not charge the
customer any fees for using a credit card. And Federal
regulation gives the consumer purchase protection. In other
words, if you have a problem with merchandise or services and
make a good faith effort to reconcile that problem with the
seller with no success; you have the right to withhold payment
for the merchandise or services.
Debit Cards
Recently debit cards have become a really big item, the use of
debit cards has doubled; often when asked debit or credit; the
answer is debit more and more. In fact, twenty percent of all
credit transactions are now done with a debit card. No interest
fees are charged on debit cards; however, at certain retailers,
they do charge a small fee for using them. Anytime you make a
purchase, the money is automatically withdrawn from your
checking or savings account. Debit cards look like credit cards
and to a certain extent act like one. But because the amount
comes straight out of your bank account, you may have a
financial fiasco if a debit card falls into the wrong hands or
if you forget to deduct the transaction amount when reconciling
your account balance.
No matter which card you choose to use--a credit card or a debit
card or both--you will experience convenience and
ease-of-transactions. It's up to you to decide what's best for
you!