The Great Card Debate: Debit vs. Credit

posted 9/19/2014 in Banking

Both your debit and credit cards should be used as they both come with different benefits

Credit cards versus debit cards; which one is best? This has been the topic of many a debate and article for years. Credit cards are criticized because of the high interest rates they bring, debit cards for their lack of any real benefits aside from letting you swipe instead of hand over cash.

However, Lincoln Savings Bank believes each of these pieces of plastic has their own merits, benefits and times when they should be used. Take a look to see if you’re using your credit and debit cards for the right things.

Debit Cards

Linked to your checking account, a debit card gives you a real-time look into your spending, which can definitely be a good thing. Use a debit card for:

  • Quick access to cash- whether at an ATM or a cash register when you’re making a purchase, debit cards allow you to get cash fast with much lower fees that credit cards charge for cash advances.  However, easy access can be a drawback.  Instead of withdrawing for a night out, withdraw enough for your entire week’s spending at the beginning of the week.

  • No interest charges- perhaps you’re a forgetful person, and even though you mean to pay off your credit card balance each month, you sometimes forget. By using your debit card, you pay the merchant AND prevent interest charges.

  • Exercising control over your spending- your debit card is tied to your checking account, so you can see the results of your spending immediately, helping you curb your spending. On the other hand, you may only see a credit card statement once a month.

Credit Cards

Yes, credit cards charge interest. However, they also come with a number of other benefits. Use a credit card for:

  • Online shopping- many credit cards offer purchase protection, meaning if a purchased item never comes or arrives damaged, you can ask your credit card company to withhold payment.

  • Establishing a credit history- it’s a weird situation that goes something like this: some lenders hesitate to extend credit to someone with a limited credit history; another way of looking at is needing to have some debt in your life in order to convince lenders you can handle debt and credit. Use your credit card for an expense already in your budget, like gas, so it’s easy to remember to pay off each month.

  • Score points- cash back, air miles and other great rewards are the result of using a card that gives you points for your purchases. But don’t get fixated on the points and forget to pay your monthly balance. All the points in the world won’t mean much if you owe thousands in debt.

The key for using either your debit or credit card is responsibility. Overusing either one without taking into account the consequences leads to overspending and debt. You can contact Lincoln Savings Bank to get more information about the debit and credit cards we offer and how they can be beneficial for you.

We hope to hear from you soon!

Lincoln Savings Bank Member FDIC

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