Credit vs. Debit Cards
Think Twice Before Using Plastic
Credit vs. Debit Cards
WHICH CARD TO USE?
- Do you shuffle through the plastic in your wallet at the cash register?
- Do you select the card closest to the front?
Common Sense Tips!
- Make sure you have adequate funds to cover debit purchases.
- Do not use credit cards to pay basic living expenses (rent, mortgage, groceries, utilities).
- Do not use credit cards to hold you over to the end of the month.
- A credit card is considered a good short-term loan ONLY if you pay the balance in full or in very few payments.
- Ask for a relatively low maximum credit card limit to keep your spending in check.
- Don't rely on ONE type of payment method. Technology is great, but problems are inevitable. Don't get stranded by relying on one source; have some cash on hand, your debit card, and a single credit card for backup purposes.
|BE SMART! KNOW THE DIFFERENCES|
|Features||Debit Card||Credit Card|
|Transaction payments||Money leaves your account directly - similar to a check. Easy to track transactions using online banking. No interest to pay. No grace period to beat.||Payments apply to interest, then to purchase balance if account is not paid in full.|
|Swipe debit or sign as credit||Sign as a credit transaction to reduce risk. Some cards extend liability protection if processed like a credit card.||Always sign as a credit transaction to reduce risk. Most cards require a signature.|
|Finance charges on
|Typically none.||Interest rates vary on types of purchases (new, cash, balance transfers). Many cards demand full payment on or before due date to avoid interest charges.|
|Usage fees||Often free but some banks charge based on the number of transactions per month or for certain merchants. ATM withdrawal fees may apply if used outside the bank's network.||Typically none, but charge penalties for late payment and may raise interest rates.|
|Overdraft fees||Banks may allow you to charge even with inadequate funds, and you incur an overdraft fee. As with checks, keep track of purchases to avoid overdrawing your account.||May raise interest rates if you spend over your preset limit.|
|Risk||Higher risk for having account information stolen, which could result in an account breach and lost funds.||Slightly lower risk than debit cards but important to safeguard cards and account information.|
|Fraud/Recovery of funds||Situations vary on recovering funds; typically require quick notice to be of assistance. Losses can be limited, depending on circumstances.||Limit your fraud liability for a lost or stolen card, often $50 and sometimes nothing.|
|Rewards||More common now to offer rewards for purchases.||May offer rewards or cash back on purchases.|
|Use for online purchases||Never. If fraud occurs it can quickly empty the account.||Safest for online use and offers purchase liability and transaction dispute services.|
|Size of purchases||Usually smaller, routine purchases||Larger purchases|
|Other||Merchants can place a hold on funds in your bank account if purchase isn't completed immediately. (gas purchases, car rental, hotel deposits, etc.)||Low interest balance transfer offers entice you to spend more. Often send checks with statements to encourage overspending.|
|Type of Card||Benefits|
|Rewards/cash back card||Best if you always pay your bill on time.|
|Low interest card||Good if you often carry a balance.|
|Fraud protection card||Travel frequently or make purchases in risky environments.|
|School or charity card||Support local school, college or charitable organization.|
|Balance transfer card||Use only if you are paying high interest rates on existing balances.|
|Specialty cards||If you have fair to poor credit.|