Why you should always use a credit card and not a debit card….
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Why you should always use a credit card and not a debit card...
We hear a lot about how bad credit cards can be for the average consumer, and that is absolutely true if used with reckless abandon. Credit card interest rates can be north of 20% and if you choose to pay a fraction of the balance month to month, you can find yourself in a hole that is hard to dig out of.
You should not use credit cards to buy things you cannot afford. If you are someone who struggles with financial discipline or you view a credit card as a "fun coupon" that you can pay back later when you get around to it, then paying for goods with a debit card will be the lesser of two evils. In this case, cutting up all credit cards is in your best interest to protect yourself.
On the flip side, if you are a reasonably disciplined person and able to pay your bills on time and live within your means, credit cards are by far the safest and best option to their debit card counterpart.
Credit cards offer payment protection that debit cards cannot match. If you see an error or fraud on your credit card bill, all you do is call into your credit card provider and get the fraudulent charge removed. If someone steals your credit card or credit card information, you have nothing major to worry about due to this recourse. In today's world, the average consumer has so many accounts linked up to a debit or credit card for automatic payments (Amazon, Spotify, Shopify, THB, Uber, etc.) that the chances of identity theft are increasing by the year. If any of these accounts are linked up to a debit card, you should highly consider switching to a credit card for your protection.
A common theft practice is to put "skimmers" on credit card inserts, such as gas pumps. Here, the consumer inserts the card into what appears to be an unaltered piece of equipment, but as the card is running the information is stolen. Never use a debit card at a gas pump if you can help it.
Credit cards can offer great rewards such as cash back or points for things like flights and hotels. These benefits can really add up over time.
Lastly, you cannot build credit with a debit card. Again, so long as you are financially dependable and responsible, using a credit card and paying the monthly balance off in full each month will help your future self out when your FICO score has increased to levels it would not have with a debit card. If you are a parent, attaching your child to a card with you can help them get ahead in life and build credit early on.
There are good reasons to use a debit card if you cannot control your spending, but outside of that, the only time most wealthy or responsible people should use a debit card is to withdraw money from an ATM. (But remember to watch out for those skimmers when you do). #creditcard #debitcard #financialadvice #towson
Consult a financial advisor for more best practices.
-Your friends at Red Oak Financial Group