The Two Faces of Debit Cards

by Jason Dean 

debit_cardIf you’re like many people, you never have a wallet full of cash any more. Whenever you need something, from a video game to a computer to a can of Coke, you pull out your debit card. It’s quick and easy, and you can use a debit card everywhere you can use a credit card. So why should anyone even bother going through the hassle of applying for a credit card any more?

The Pros of Debit Cards

A main advantage of debit cards is that they give you immediate access to cash. Since they draw your money from your checking account, you never have to worry about paying fees for cash advances. Another big plus to debit cards is that, since they’re attached to your bank account, you don’t have to worry about bad credit. If you’ve had credit problems in the past, you might be afraid that you can’t qualify for a traditional credit card. However, as long as you have money in your bank account, you’ll be able to use your debit card anywhere you could use a credit card.

The Cons of Debit Cards

One of the great things about credit cards is that you don’t use your own money. Of course, you have to pay the bills with your own money, but you still have leeway. Imagine that you had some sudden car trouble that was going to cost $600 to repair. If you only have a debit card, you have to have $600 in your bank account before you can pay the repair shop. For some people who live paycheck to paycheck, this can be nearly impossible. And what if you need your car to go to work? Having to miss work certainly isn’t going to help your money problems.

However, if you have a credit card with $600 available credit, you can charge your repairs and be back on the road in no time. Even if you don’t have the $600 in your pocket, you have at least thirty days to save it up before your bill comes in the mail. And that’s if you want to pay in full. If it will take you a few months to save up the extra $600, you can pay smaller amount to the credit card company each month until you’ve paid off your charge. You’ll have to pay interest, but it can be a lifesaver for someone who can’t get their hands on a large sum of money quickly.

Getting a Credit Card

You know that it’s easy to get a debit card, but it’s not too hard to get a credit card either. Many companies will give people with poor credit a card with a low credit line and a high interest rate. The important thing is getting that card, though. Begin building your credit by charging regular purchases like gas or your cell phone bill to your new card. Then pay off the balance each month before that high interest rate kicks in. Once you’ve improved your credit, the credit card company can lower your rates and give you a larger line of credit. It’s worth it to start now!

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One Response to “The Two Faces of Debit Cards”

  1. The Dividend Guy on September 15th, 2007 4:29 pm

    I rarely have cash in my pocket and use a debit card almost exclusively. Debit card users need to have a system, either using software like Quicken or via online balance checking to ensure you know what is left in the account. This is the only way to stay on track with your spending goals – it is not visible like cash in you pocket.

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