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?

STOP! Think twice before you select a card.

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
FeaturesDebit CardCredit 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
account balance
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.

 

Select the Best Card for You
Type of CardBenefits
Rewards/cash back cardBest if you always pay your bill on time.
Low interest cardGood if you often carry a balance.
Fraud protection cardTravel frequently or make purchases in risky environments.
School or charity card Support local school, college or charitable organization.
Balance transfer cardUse only if you are paying high interest rates on existing balances.
Specialty cardsIf you have fair to poor credit.

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