 |
 |
| Credit Answers > Debt-Management-Articles-2010 > Credit Corner |
|
|
| |
A recent article by Kiplinger magazine revealed that Americans used their debit cards 28.4 billion times last year, compared with 21 billion credit-card
purchases. Here are just a few advantages and disadvantages regarding debit and credit. It may be wise to first check with your bank regarding the particular fees, regulations
and conditions attached to each before using.
The Debit Decision
Debit cards possessing a major bank logo can usually be used at the same places that accept credit cards. For debit purchases, funds are taken directly out of a customer's bank
account as if they were making a typical ATM transaction.
If used responsibly, debit cards could be a good money management tool for those who want to break themselves of bad spending habits, including the 'buy it now pay later' attitude
that sometimes accompanies credit card usage.
If purchasing with debit, you should learn to always be aware of exactly how much money you have in your bank account.
ConsumerReport.org suggests tracking all expenditures and making immediate notations of all transactions to avoid
costly overdraft fees and penalties.
Purchases on debit cards do not acquire interest - in essence, a consumer is basically using plastic to pay cash. While this may be considered a benefit for some, be aware it can
be a costly drawback to those who are not financially organized. If you do use debit, it may be a good idea to keep all receipts until you check your account balance and
financial statements. Also, keep in mind that some retailers and merchants, such as gas stations, hotels and car rental outlets, may use 'blocking' on debit card purchases. For
example, if you purchase $10 worth of gas, an outlet may put a hold on $50 of your funds, causing an overdraft if you don't have that amount in your bank account. The block
is eventually lifted after 24-48 hours, but length of time usually depends on the merchant.
A Case For Credit
Credit cards also require responsible usage and financial discipline. If you choose to pay for a purchase using a credit card, try to keep in mind that you are 'borrowing' money
which needs to be paid back. Try not to charge anything that you do not need or cannot afford to pay off as soon as possible. In addition, try to remember that unpaid credit
card balances accrue interest.
Credit card purchases, unlike those made with debit cards, are usually protected by the Fair Credit Billing Act. If you have a problem with an unauthorized charge or a
defective item that was purchased with a credit card, the Fair Credit Billing Act could provide additional support.
|
|
|
|
|
Get Debt Relief Now!
For a free consultation call 1-800-297-6417 or start by filling in the form below and one of our specialists will contact you. We are here to help you 24 hours a day.
|
|
 |
|
|
