Debit vs. Credit

If you've ever shopped in a department store or purchased gas, you've probably considered this age old question - credit or debit? Despite the debit card's popularity today, there is strong evidence to support both types of cards. Here's a look at some of the and pros and cons for both debit card and credit card usage.

• They may seem similar, but debit card debt and credit card debt are not equals. With debit card debt, you run the risk of receiving overdraft fees, but there typically are not interest charges. Every credit card has an interest rate and they usually end up costing consumers much more than debit card overdraft fees. Remember, whether it's credit card debt or debit card debt, we can help you find the best debt consolidation program for your needs!
• For some people, using credit cards to help build their credit score can be an advantage over debit cards, which usually have no effect on credit scores. However, it can also be disadvantage for those that struggle to responsibly use their credit cards, resulting in a damaged credit score.
• One of the major differences between credit cards and debit cards are the types of award programs they offer. While some debit cards may offer a small amount of cash back on certain purchases, many credit cards have expansive reward programs for their customers. Of course, it's questionable whether this is really beneficial to the consumer, as these programs can often lead to people putting themselves in debt by chasing rewards.
• Most financial experts agree, controlling your spending is easier with a debit card than a credit card. Although credit cards have maximum limits, many of them are extremely high and just reaching them can be a challenge. There's also the feeling that using a credit card doesn't exactly feel like spending money, since it can always be paid off later. Using a debit card should feel the same as using cash, since it's coming out of your bank account right away.
• Using debit card and entering your PIN typically means any transactions will be withdrawn from your account immediately. This can leave you more susceptible to overdraft or insufficient funds fees. On the other hand, credit card transactions can often take several days to process and even then, you have at least some time to pay them off.
• Today, one of the most dangerous financial threats we face is identity theft. It's worth noting because credit cards and debit cards handle identity theft situations much differently. For both cards, it's on you to report any signs of identity theft as soon as possible, but getting your money back can be more difficult with a debit card. With a credit card, you need only have the transaction removed from your account, but you'll be fighting to get your own money back with a debit card.