Debit Cards And Credit Cards
Being able to pull out a debit card or credit card has virtually eliminated the chances that you will be caught short of money at an inconvenient time, such as at the checkout counter at a grocery store or during dinner with friends at a restaurant. In 2006, there were 984 million Visa and MasterCard credit and debit cards in the United States alone. Although these cards seem to work in similar manners, there are notable differences between them.
Debit cards provide a convenient alternative to cash, especially if you do a lot of shopping or pay your bills online. The cards are linked to your bank account so the money you spend is automatically deducted from your account and your bank balance goes down with each debit transaction. This makes you less likely to overspend and reduces the chances of accumulating significant debt.
Credit cards allow you to use a lender’s funds to make a purchase now and you pay the money back later. If the money is paid back within the billing period, no interest is charged for the purchase. If you do not pay the balance in full before the end of the billing cycle, you will be charged interest on the balance of the credit card. These interest charges can add up fast, resulting in quickly accumulating debt.
Using credit cards responsibly can offer a number of advantages. They help build your credit and provide more protection than a debit card if someone steals your card or account information. If a fraudulent charge is noticed on your credit card account, you can call the credit card company and make a dispute claim, resulting in the charge being removed from your balance. If thieves steal your debit card information and use it, it could take weeks for the bank to complete their investigation of your claim and replace the lost funds.
For many people, having both a debit card and a credit card available makes sense. The important thing to remember is do not spend more than you have with either type of card. If you are able to accomplish that, you will be able to enjoy the benefits that each type of card can provide.
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