For many of us, pulling out a credit card and using it to pay for anything and everything is second nature; a reflex that we have developed over the years.
However, if you also have a debit card in your wallet or purse, it’s often best to use it to make purchases. So why is it worth reducing the amount you use with your credit card? Let’s review the top reasons to rethink your spending habits.
You will avoid interest charges
Debit cards are interest free, as of course you will be spending your own money directly from your checking account, rather than borrowing money from the bank like you do with a credit card .
So if your credit card is subject to high rates, which is likely right now, you could save by paying with a debit card instead.
You won’t have to pay any withdrawal fees
Although you can withdraw money from an ATM using a credit card, it’s not a good move because most providers charge exorbitant fees when used in this way, which makes more difficult to stick to a budget.
Meanwhile, with a debit card, you can withdraw as many moolah as you want without having to pay any additional fees, on top of anything the ATM operator might charge to cover their own expenses.
You can also avoid the annual fee
While not all credit cards come with annual account fees, some have additional costs associated with maintaining them. And if you’re looking to invest to build wealth, every penny counts.
On the other hand, unless you have opted for a particular plan that entitles you to other advantages and privileges, there will be no price to pay year after year for the use of your credit card. This brings us to:
How to find a debit card that suits your needs
If you want to find the right prepaid card with no fees, comparing your options online is worthwhile.
You can also ask friends and family for recommendations, as you might not only identify high-quality vendors this way, but also uncover less compelling alternatives that are worth avoiding.
You will be encouraged to manage your money more responsibly
One of the main disadvantages of credit cards is that you can feel like you have access to “free” money, until you need to pay off the balance and find out that you have spent a fortune without really thinking about it.
Conversely, when you use a debit card, you have a set amount in your account that you know you can use, and so every time you take it out, you’ll know it’s taking a cut off the total, and you approaching zero.
It automatically makes you think more about what you spend with your money, so if you’re prone to misusing a credit card, this could be the answer to your bad habits.
Even better, modern banking brands often have awesome mobile apps that track your spending and alert you to all sorts of potential issues before they happen. So rather than going wild with a credit card, a debit card could pave the way to a more secure financial future.
Your credit score will not be compromised by late payments
Some oppose the use of debit cards because if you end up in your overdraft, your bank will charge you for this foray.
However, credit cards are arguably much worse, as missing a payment will hurt your credit score and leave a black mark on your credit history that will interfere with your ability to take out loans later on.
Going into the red with a debit card, on the other hand, does nothing for your credit score. It’s a fine balance to strike, as responsible credit card use strengthens your credit history. But if you can’t trust yourself to pay attention to it, the pros won’t outweigh the cons.
You can be sure that your card will be accepted almost everywhere
The credit card market is a little more diverse in terms of the payment systems used and the brands that participate in them. The result is that some retailers, online and offline, will only accept certain common payment options, excluding a credit card you depend on.
Debit cards aren’t as crowded, and so if you want to buy anything from a physical outlet or an online store, there’s a much better chance that your particular method will be supported.
You can still use both a credit card and a debit card efficiently and responsibly, but an active balance is necessary to avoid some of the problems mentioned above.
It makes sense to make more payments on your debit card if you have cash to spare, and you know it will quell your urge to splurge.