Your Debit Card Can Kill Your Credit

Credit vs Debit - Gephardt Daily

Your Debit Card Can Kill Your Credit

Should you be using your debit or credit card? Well what do you actually know about what happens when you make a purchase using either a debit or credit card? Let’s find out.

What are the real differences and similarities between debit cards and credit cards?

Some similarities are: debit and credit cards look a lot alike. They both have a sixteen digit card number, expiration dates and security codes.

Yet that is about where the similarities end Some differences are: debit cards allow bank customers to spend money that they have made by drawing it out of the funds that they have deposited into the bank. While credit cards allow consumers to borrow money from the bank, up to a certain amount and then they have to pay the bank back the money that they borrowed.

Credit - Gephardt DailyDebit - Gephardt DailyWhen you swipe your card to make a purchase and see “One Moment Please” on the screen what’s happening is your bank is checking your debit or credit card to see if you have enough money in your account to buy what you are needing or wanting.

Say you used your credit card when buying products; you would use your signature to confirm the transaction. What happens then is that the bank suspends your credit. That is the money that the bank is allowing you to spend and then you just need to pay them back within an allotted time that you set up with that bank.

Now if you used a debit card to make any sort of purchase you will need to use a PIN number that is four digits long. This is usually a personal number that you can choose but some banks will choose it for you. Advantages and Disadvantages: Debit cards usually have few or no fees of any kind, unless users spend more than they have in their account and incur overdraft fees. Credit cards generally charge annual fees, over-the-limit fees, late-payment fees and a plethora of other fees in addition to monthly interest on the card’s outstanding balance.

Are you tempted easily? Then a credit card would not be the type of card that you will want to have in your midst. Whereas debit cards will draw out money that you already have in your account.

Now unlike debit cards, credit card users can get rewards like cash, discounts, travel points, and many other perks by using a reward credit card. If you are a smart consumer and you pay off your card in full on time every month you can profit substantially by running other monthly bills and purchases through the banks.

So the bottom line is that if you are a smart shopper who can control you spending you are probably wise to reap the benefits offered by credit cards. If you would like to be protected from fees and ensure that you are going to stay within your limits of money that you have in the bank, stick with a debit card. 

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