When Should I Use Debit, or Credit Card When Shopping to Save Money?
Mar 22, 2017 01:57
It is said, “A penny saved is a penny earned”. Often we do not take enough care to save money as we do to earn it. Life is always lived at its best when we educate ourselves regarding the nuances of simple day to day affairs. Often we must find some time to stop, explore and proceed so that we grow mature and efficient day by day. Spending money is a tricky thing. Nothing comes free of cost in life.
While we need to spend money on every commodity we buy or the service we avail of, there are sure ways to make a good saving by learning some life hacks. Often the ways could be as simple as exercising the right option we have in front of us like using a debit or credit card.
Though they both look alike, credit and debit cards are not the same. We all just know that a debit card lets us spend or withdraw from what we have already earned and saved in a bank while a credit card lets us draw money for different uses from the banker’s loan which has to be paid eventually. When it comes to paying through a card, most people know little that paying through a credit or debit card certainly makes a big difference. The right usage of credit or debit card will let us help saving money online during different digital transactions. For the simple question, “When should I use a credit or debit card?” there is no universal answer. It all depends on the situation and the priorities of the consumer. However, here are the general guidelines to make the right decision.
How credit or debits cards help save money
There are several expert tips to save money online. Some of the most popular avenues include finding time-sensitive deals, discount coupons and big sales. However, the lesser discussed way to save money online pertains to the topic of using either a credit or debit card. Notably, a consumer’s choice of using a given card can certainly impact the amount spent on the transaction. This is however a tricky subject that needs a detailed understanding. While both credit and debit cards save the consumer of the hassles of carrying paper money and bestow the convenience of online shopping, here are different situations where one is better than the other.
Talking of the account security, both credit as well as debit cards feature several measures to protect the consumer. However, most interestingly, the safeguards available with credit cards are more robust than those with the debit cards. For example, the terms of the Fair Credit Billing Act, the maximum liability of a consumer while the credit card information is stolen is $50 with regard to offline charges and $0 in case of online. Such legislative measures do not cover debit cards. Alarmingly, the card holder can be victimized and made responsible for a $500 bogus purchase unless the suspicious activity is reported within two days. Also, if an instance of a debit card fraud is not reported within two months, then the consumer can be hooked for the illegal transactions that happened on his or her card irrespective of their value.
Debit cards are certainly on the winning side with regard to the costs connected to digital payments. While paying through a debit card, the consumer will not have to pay any fees other than what is charged for spending for the overdrafts. If you can avoid overdrafts, then you get to incur no charges whatsoever for paying through debit card. While availing of a credit card facility, the consumer has to pay an annual fee and also need to pay the interests. There can also be several hidden fees that can be highly bothering in the long run. So, it is necessary for a consumer to read through the print before applying for a credit card.
Credit cards are advantageous with regard to spending limits. While credit cards mean the consumer can make use of the banker’s money for their spending, they also get to extend their buying power beyond the scope of their bank balance. At the same time the card user must avoid the trouble of over spending and thereby ruining the financial health in the long run. Interests build up very quickly on default payments month on month. This will mean a situation where the card user actually pays much above the market price for the goods purchased through the credit card. Such situations totally falsify the very purpose of online coupons and discount offers. Debit cards are good in this sense that they prevent you from making many impulsive purchases. For those who cannot control their reckless spending habits, debit cards are the safer choice.
A large number of providers offer reward programs for the sake of retaining prospective and loyal customers. The same is the case with the providers of debit and credit cards. The reward benefits that debit cards carry include automated savings program, cash back offers, minimal ATM charges and some others. However, the perks announced by the credit card issuers significantly outweigh those given by the debit card providers. Some such alluring rewards for the users include travel points, extended warranties on some goods and electronic gadgets, low or often zero introductory interest rates and many others if the consumer can choose the right credit card.
How to compare
Experts say credit is a highly powerful option than debit in some ways. Credit cards protect the consumer from identity theft. They can get their purchases protected from defects and faults. In case of any unforeseen situation, the disputes are resolved fast without the consumer having to pay for getting the money back. At the same time, the fact remains that credit cards are still credit. Every purchase ends up increasing your debt. If the consumer lacks the intelligent approach to handle the credit cards, then they cannot avoid serious financial implications in due course. In this case, debit cards help control the expenses and are so a better option. The points for comparing between a credit and debit card are too many and tricky at the same time. Therefore the user must make efforts to understand them better to be able to make informed decisions.
Though credit cards and debit cards perform the same function during a digital transaction, they do the same differently. Consumers need to evaluate several aspects and make the right decision regarding which one to use during a given situation. Before committing to a mode of payment, it is important to thoughtfully explore the selling points and also the drawbacks of the given payment method. It is always advisable to make a personalized decision depending on the lifestyle, spending habits, expected purchases and personal shortcomings. While a consumer is free to use any option, it certainly makes a difference.
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