Which is the best type of card for you, credit or debit? The answer depends a lot on how you handle money and what you need to purchase.
The following information comes from CashCourse.org, a great financial literacy site you can register to use for free.
- Personal liability limitation of $50 for identity theft.
- Convenient purchase method.
- Build up your credit history.
- Source of money for emergencies.
- Accepted by most stores.
- Benefits such as frequent flier miles or rental car insurance.
- Too convenient to use and easy to accumulate debt.
- Late payment fees (up to $30).
- Annual use fees.
- Cash advance fees.
- High interest rates.
- Rate increases for late payments.
- Floating interest rates that go up without notice.
- Cash advance interest.
- Buyer Beware:
- A "free trip" can require you to spend $10,000 or $15,000 – often on a dollar-per-mile basis.
- Low interest rate introductory offers and balance transfers that suck you in, leaving you with a high interest, high fee card months later.
- Faster than writing a check, and your money is directly debited from cash or checking account.
- Have access to cash from ATMs all over the world.
- Provide a receipt to check your balance.
- Can buy postage stamps at some ATMs.
- Can make deposits or transfer funds between accounts.
- Personal liability of up to $500 for identity theft, and you may lose all the money in your account if you do not report the theft within sixty days.
- Quarterly or annual-use fee.
- "Point-of-sale" fee when swiping the card through a reader and entering your personal identification number.
- Fees for using card at an ATM not owned by your bank.
So, which should type of card should you use?
If you can handle paying off your credit card balance every month (i.e., treating your credit card like a debit card), I would suggest using a credit card for its convenience and benefits. However, if you need to control your spending more, I would advise using a debit card so that you only spend within your means. Remember, credit is not cash; credit is a loan you have to pay back, often at high interest.
What does the Funding Lord do?
I have both type of cards, but I only use my debit card to withdraw money. For everything else, I use my credit card, since I pay off the balance in full every month. My credit card also has no annual fee and a low interest rate (it's from USAA). USAA also provides my debit card and reimburses me for fees for withdrawing from other banks. USAA is the best deal for me, but it may not be the best one for you.
Where can you find the best deals?
Shop around for the best credit card deals using Bankrate, CardRatings or NerdWallet, which all offer good information and advice. They even have information on prepaid debit cards and reward offers for credit cards.