Credit Cards vs. Debit Cards
Wednesday, January 16th, 2008I’ve recently made the switch from using my debit card for everything to using my credit card for everything. Interestingly, this coincided with a switch that a good friend made doing exactly the opposite of that. She used to put everything on credit cards and has now decided that she’s going to use debit instead. After debating with each other about this for awhile, we came to the conclusion that neither debit cards nor credit cards are necessarily inherently better than the other. But there are specific choices that have proven right for us – and could be right for you.
For me, putting everything on one credit card makes the most sense. The major benefit that I get from this is that I feel organized about my finances. I never have to worry about whether I’m going to overdraft my account because debit purchases haven’t gone through yet. Additionally, I only have to worry about bill paying once or twice a month because everything is going on that one card. This means that I feel less stress about payments. Furthermore, since I only get paid on a monthly basis, it makes the gaps between paychecks less of a problem. Plus, I really like the rewards that I get from my credit card so that’s what makes the most sense to me.
For my friend, the opposite seems to hold true. She was using a credit card to pay for all of her bills and expenses. The problem was that she was constantly racking up a credit card bill that she couldn’t pay off in one month. This resulted in excessive debt which put further strain on her finances and caused her stress. She gets paid weekly, so she always has enough money to last until the next paycheck. Using a debit card, she spends only what she has. She couldn’t maintain that self-control with a credit card so the debt card choice makes more sense for her.
The difference between using a credit card vs. a debit card seems to be in the hands of the credit card holder. Some people, like myself, are responsible enough with their credit cards to be able to keep spending within their monthly income limits. This requires a sense of discipline but provides a sense of organization. In contrast, some people only maintain that kind of self-discipline when they’re under threat of running out the money in their account. In that case, the debit card seems to work best. Of course, not many debit cards offer the rewards back that credit cards can so if you can go my route, you might be better off. But this is once case where a personal assessment is the best tool towards making a smart decision.
