Credit or Debit card, when to use each one?
The benefits and great value offered by credit cards vs the debt free method with debit card. Make an informed decision when you use a payment method.
According to a study released in 2020 by the Federal Reserve Payment, debit cards are used almost twice vs credit cards, but in reference to money spent, credit card has a solid 30% advantage above debit card payments.
The use of credit or debit card depends on several factors, such as your level of comfort with debt, the ability to pay later and the willingness to accept certain risks in exchange for certain rewards.
Here’s a quick reference of how and when:
- You can’t stand the thought of being in debt even for a moment: Debit
- If delaying payment for purchase temporarily is your way to go: Credit
- If you are already carrying credit card debt and is hard to make payments: Debit
Credit card benefits:
- Travel insurance
- Rental car insurance
- Possibility to archive a great credit score if used correctly
- Most frequent offered discounts
- Reward Points
- Frequent-flyer deals
- Extended product warranties
Debit Card Benefits:
- Resistance to impulse shopping
- Do not have to deal with monthly payments
- Prevents overspent
- Avoid future financial disaster
- No high interest rates
If you are already in a big credit card debt it is so important to discontinue the use of credit cards immediately. The responsible use of credit requires financial discipline and even sometimes disciplined users can easily get into debt problems facing rough circumstances such as the loss of a job or big, emergency expenses.
