Debit Cards
We all know you do not need to use a credit card when you are on a budget, but should you use a debit card?
Debit cards tend to be like a credit card in that it does not hurt to swipe, where it hurts if you pay cash. I recommend using a debit card for online purchases and booking travel in place of a credit card. Unless you can work out a good system of staying on budget using the debit card, I would use cash for the majority of your day to day transactions. Here are some pros and cons of using a debit card:
PROS:
-Can be used instead of a credit card for most situations such as online shopping
-Double as ATM cards to get cash
-No debt accrues, no interest charges, no late fees
-Many banks offer same fraud protection as with credit cards
CONS:
-Easy to overspend if you use them for variable categories like groceries and clothes, where cash is better for these
-Money is withdrawn out of your checking account if there is a merchant or bank error, so it is not available to you until the error is corrected
-Your bank may not offer the same level of fraud protection as with a credit card, so check the policies
-Some merchants may put a hold on for an amount larger than your purchase, apparently this is a common occurrence when paying at the pump
-Some rental car locations will not take them at all; others require a large deposit or put a large hold on your funds
-Some hotels/motels will put a large hold on your funds if you check in using one.
Labels: cash, Credit Cards, debit cards
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Posted By: Joe on Tuesday, May 27, 2008
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