Which is better – a credit card or debit card?

Knowing how to manage your money is a very important part of every individual’s life. Every person needs to find a way to save some of their money, figure out how to spend it, and keep tabs on what is happening with it.

You need to think before just want to whip out the plastic to pay for groceries and other items. It is very important that you understand the difference between a credit card and a debit card. You can use both of these cards at stores, but they are definitely not the same.

They are funded in different ways. It is very important that you need to know how both of these cards work and what the different costs are before you make any decisions. Most people have at least one of each of these cards and you really do not want to get confused between the two of them.

A debit card is linked directly to your checking account and the funds are taken off your checking account when you use the debit card, which means that you cannot spend money unless you have money in your checking account. An added benefit is that some ethical banking companies like Atmos (joinatmos.com/cashback-checking) offer debit cards that give you cashback on many of your transactions. Such features make it a more appealing form of payment than others. That’s why many people are using these cards instead of writing out checks, also because of the lower bank charges. Payments are made instantly and you can get a detailed account of where your money has been used and where it’s been saved.

You can have some cash on you, but there are a few pitfalls to using cash as the only form of payment. Most utility companies do not want to be paid in cash, they either want a check, to be paid online or want the payment made with a debit or credit card. All purchases are shown on your statement, which means that you can keep track of what is happening to your money.

Does a debit card cost anything? Never assume that the debit card will be absolutely free because they are not. There are certain monthly fees that are charged on all debit cards and if you use it incorrectly, you will end up paying extra fees.

Overdraft charges are what most people end up complaining about. The card is connected to your account and if you end up spending more than you have in your account, you will end up with problems. Most times the bank will let the charge go through, but they are paying on your behalf and this ends up costing you more in charges.

Using a credit card is a very convenient and easy way to pay, but unlike a debit card, when you swipe your card someone else is covering the bill for you in the meantime. The difference is that with a credit card money is not being removed from an account already filled with cash. The money is being borrowed from the bank or other entity that issued the credit card. You use their money to pay and they give you a chance to pay the money back.

What costs are involved with a credit card? Some cards are charged with an annual fee. There will still be fees payable even if you do not pay annual fees on your credit card. You will end up paying a lot more in fees if you do not pay off the balance immediately and you will be charged a percentage of the amount you borrowed. The fees can really add up, depending on the amount you spent to start off with.



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