When it comes to paying with plastic you have two options, and that’s debit or credit. It can be easily debated that one is better for you than the other. There are plenty of pros and cons for both types of cards.
The truth is everyone has different money habits and should choose a card that works best for them. You can read plenty of articles that favor one over the other.
Here’s a list of four beneficial features you will get with a debit card.
1. Less fees
Unlike a credit card, a debit card has no annual fees, no late payment fees, and no interest charges associated with it. To be transparent you will still incur a fee at most financial institutions if you use your debit card and overdraw your account. There is a growing number of banks that have $0 overdraft fees like Chime and nbkc.
2. Added convenience and security
A debit card helps eliminate the use of writing a check to purchase goods, which can be very inconvenient. Most retailers and ecommerce websites accept debit card as a form of payment. In addition a debit card also provides you with the option of carrying less cash in your pocket, which can be beneficial if your wallet is lost or stolen.
3. Helps budgeting
A debit card can be beneficial when it comes to budgeting your money. A debit card is linked directly to your bank account, so you have a good idea of how much money you have or don’t have at any point. Keep in mind some debit card purchases can take 24-48 hours to officially post to your balance.
4. Earn rewards without debt
Another benefit of a debit card is earning rewards without racking up credit card debt. Not all financial institutions offer a rewards program with their debit card, so you may have to shop around. One of the best personal Checking accounts that does offer debit card rewards is at Radius. When it comes to business debit card rewards those financial institutions that partner with third party services like CardCash can be beneficial.
As you can see debit cards come with some real benefits that could help anyone. To determine which card type is best for you, consider your current money situation. There are certain times when using cash may be the best option. For other purchases it may be smarter to use a debit or a credit card.
It’s best to figure out what your financial goals are such as; staying out of debt or building your credit history. That will make it easier to choose which payment method makes the most sense for you.
Sometimes using both debit and credit cards is best. That allows you to carry cash in your wallet for an emergency, use a debit card on a daily basis, and use a credit card for large purchases that will be paid off over time.
Read more money saving tips from the FrugalFellow.