Credit Or Debit? How To Make Smarter Payment Options With Your Purchases

Credit Or Debit? How To Make Smarter Payment Options With Your Purchases

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When you get done with your shopping trip, you are usually met with the question of whether to use debit or credit when you check out. While the question itself is innocuous, it does bring up a fair point. While debit and credit can seem to be very similar, they actually represent very different types of spending. Understanding the reality of each type of card, as well as the benefits of each, will help you to determine how you should spend your money and how your money will be used in the future.

The Benefits of Debit

When you use a debit card, you use money that you already have in the bank. This means that you will never run the risk of spending money that you do not have, and that you will certainly never have to deal with interest payments that make your purchases cost more over time. Debit cards tend to be the choice of those who do not want to deal with debt, and are especially useful for those who want to avoid the annual fees of credit cards when they go out and shop. Debit cards are generally better for those looking to save rather than spend.

The Benefits of Credit

Credit cards have a number of benefits. When choosing to use a credit card, you’re given the ability to access all that your credit card company provides for you, including bonus points and fraud protection. If your credit card information is used fraudulently after a purchase, for example, you will not be responsible for the charges. You may also be given a chance to accrue bonus point by using the credit option, which might in turn help you to save money on future travel or even generate a bit of cash when you spend.

Good Debt

It’s important to know the difference between good and bad debt. Having a good credit score is important when it comes to buying a home. Mortgages, car payments, and student tuition are all examples of “good debt.” This is something that should be paid off over time, and help your credit score. In general, you should use a credit card to pay for the extra “wants” in your life that you can’t afford. This will allow to have a better hold on your finances and stay away from “bad debt.”

Choosing between debit and credit is a personal choice. If you are looking to keep a close eye on your money, it is usually better to use a debit card. If you are looking to gain points or exercise your credit, then a credit card is generally the better choice. No matter what you choose, though, you will have to deal with the financial consequences. Be sure that you only are going into debt for necessary things that can help build your credit score, like a home.

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