Debit v Credit Cards: Determining What's Better

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This is to do with the personal choice of the end-user [being you]. With credit card debt running into millions, there are many people who feel that the best way to go – when it comes to keeping a card – is by using a debit card.  Yet, if you are one of those people who always have control of your money, then a credit card is the card for you.

If you can control what you spend and pay your credit card bill on, or before the due date, then getting into credit card debt will never be a problem.  You are the type of person that banks and credit card companies love to have as their customers, as you will always be relied upon to pay your bills on time.

They will even offer you – from time to time – a higher cash limit on your card, because of your custom.  Of course, again, if you can control your money, and you can handle a higher cash limit on your card, this will not be a problem to you.  However, there are millions who struggle to pay off credit card bills, every year, and a credit card, in their hands, can become like a lethal weapon.

For them, applying for a debit card would be the best course of action to take.  This is simply because a debit card will give you more control over how you spend – and what you spend it on.  Furthermore, with a debit card, you can only spend the amount that is actually in your bank [because the debit card is directly linked to your bank account].

So, for instance, if you have savings of an x-amount of money in your bank account – when you apply for a debit card – this x-amount will be replicated on your card.  Therefore, when you use your debit card in stores, you can only spend the amount which is on your card, you will not be allowed to go over that amount.

Once your money is spent, you then have to place more money into your bank account [in order for you to be able to use your card again].  However, there are other types of debit cards in which you do not have to apply to the bank.  These debit cards are routinely advertised in newspapers and magazines, they, indeed act like pre-payment cards [ and really, this is what they basically are].

When you apply for this type of debit card, once it arrives in the post, there is only a small, standard monthly fee that you have to pay [this is for the card itself].  You can pay this at the time of applying for your card, or you can pay the standard fee when you activate your card with money [paying the standard fee plus the amount you want to place on your card,which would be the cash limit].

Take your pre-paid card to any store displaying the pre-paid sign, hand over your card to the cashier, and they will charge your card through their terminal. This means that they take your card’s account number and punch it into their computer terminal, then they put in the amount of money you have asked to be placed on your card.

After you have handed over your cash, your card is then charged. You receive a receipt stating this fact, with the time, day, and date you purchased your credit for your card. Once this is done your card will be ready to use. You can use your pre-payment card as you would a normal credit card, with major differences.

The differences being, that with a pre-payment card – and indeed with debit cards in general – there is no APR [annual percentage rate]to pay, and you can only spend the amount of money that you have charged your card with. It is impossible to go overdrawn, because you always have full control over how much money you place on your card.

Also, when appying for a debit or a pre-payment card, there are no credit checks you have to go through in order to get your card. A lot of people like the idea of being in control of their money, and of having at least some kind of cash card on them – even if it is not a credit card, and this is where pre-payment and debit cards hold their own.

However, when it comes to credit cards, then the situation is different.  There are many people  who view receiving a credit card as ‘free money’, little realizing that they have to pay the money back when the bill comes in. Unless you can control your money in such a way that it does not hamper your future financially, then a debit card or pre-payment card is the best way to go.

Also,with a credit card, one always has to watch out for the APR [annual percentage rate]especially if this is variable. What this means is simply that your bank can change the rate of your APR placed on your card, whenever they wish. This means that the APR can go up or down, without the bank having to inform you. 

When applying for a credit card, always read the small print, and be aware of just what you are signing. Also, you have to realize that with a credit card the APR only kicks in if you are late with paying your credit card bill. If you pay your bill on or before the due date, [in other words, early], then you will have no APR to pay. The bonus with debit and pre-payment cards, is the fact that they carry no APR at all.

So, there you have it, the differences between credit cards, and debit cards. if you feel that you can handle your money, and that you really do not like the idea of a  cash limit as such, then apply for a credit card. However, there are millions of people who like the idea of being in control of their money, and also like the idea of no APR at all on debit and pre-payment cards. Plus the fact that when applying for a debit or pre-payment card there are no credit checks. Put all of those things together and debit cards become a very attractive alternative to credit cards.




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