More for Your Money: Why Debit Cards Are Better Than Credit
Whether you are stocking up on essentials, buying the perfect present for your spouse, or splurging on a treat just for you, how you pay matters more than you might think. Certain forms of payment provide valuable protections, from fraud detection and insurance to cash back and other offers.
For many years there has been a widespread perception that credit cards are the best ways to pay for all those everyday purchases, but now many consumers are taking another look and finding that debit, not credit, comes out on top. There are a number of advantages that set debit cards apart from their plastic credit counterparts, and when you do an honest assessment you may agree that debit is indeed the best way to pay. Here are just some of the advantages shoppers will enjoy when they whip out their debit cards and leave their credit cards in their wallets.
No Chance to Overspend
When you pay with a credit card, the amount you are allowed to spend is restricted only by your credit limit, and chances are that limit exceeds your household budget. If you are not careful, you could end up with a balance you cannot pay – and the credit card company will be happy to collect the extra interest until your bill is paid in full.
Debit cards work differently, making it difficult, or even impossible, to spend more than the cash you have on hand. Unlike credit cards, debit cards are tied to the amount in your linked bank account, and if the money is not there the purchase will be declined.
You can protect yourself further by turning down overdraft protection, ensuring that any attempts to spend more than you have will end in failure. But whether you turn down overdraft protection or not, freedom from overspending is surely a major benefit of paying with a debit card.
No Credit, Bad Credit, No Problem
If your credit score is less than stellar, just getting a credit card could be a problem, and even if you have one the credit limit could be so low as to be nearly useless. If you end up with one of those low credit limit cards, you can easily exceed your limit and end up with an extra charge for your trouble.
When you pay with a debit card, you do not have to worry about credit checks, credit scores, or anything else the financial industry dreams up. All you need is a bank account with sufficient funds and you can buy what you need without worry.
Fraud Protection – Yes Really
There is a widespread misconception that debit cards lack the kinds of fraud protection and loss prevention measures credit cards possess, but that is no longer the case. Many banks have now adopted robust fraud protection measures, from automated algorithms designed to flag unusual purchasing patterns to an immediate reversal of suspect or unauthorized charges.
A typical item from a debit card agreement tells the fraud protection tale very well, assuring banking customers that their total losses will be limited to no more than $50 if they report the loss or theft of their debit card within two business days. While customers who fail to report the loss of their debit cards promptly could face larger losses, the built-in fraud measures should be sufficient to protect any responsible banking customer.
Cash Back and Other Perks
Credit card proponents have long pointed to cash back, gift cards, and other perks on their plastic, but now banks and debit cards are catching up. If you think that only credit cards offer these kinds of perks, you may be in for a surprise.
From big money center banks to regional savings and loans to local credit unions, a growing number of financial institutions are upping their debit card games and offering significant incentives for their use.
Some financial institutions offer a set amount of cash back, sometimes a nickel, sometimes a dime, and sometimes more, for every single purchase no matter what its size. Others offer cash back percentages the same way credit cards do. Either way, getting paid to buy the things you need feels pretty good, giving you one more reason to whip out the plastic.
Monitoring your debit card usage has never been easy thanks to the many tools banks and credit unions now have to offer. From mobile banking apps that provide safe and secure access to bank accounts to mobile banking websites that provide up to the minute balance information and other vital information, these modern tools work in conjunction with debit cards to monitor purchases, track earnings, and perform all kinds of important functions.
The use of these tools can also empower consumers, giving them advanced knowledge of the misuse of their accounts and helping to protect them should an unauthorized purchase take place. With these protections built-in, there is really no reason not to use debit cards instead of credit.
The next time you are out shopping, you would do well to remember the many benefits of debit cards. These little pieces of plastic have come a long way, offering the same types of benefits, the same levels of fraud protection, and even more benefits than other forms of payment.