Should You Use a Credit Card or Debit Card?

Credit or Debit?

First Published Date: February 15, 2016

Common question we hear these days is which is a better option to pay for your purchases, a credit or debit card? You will even see ads running on TV warning consumers not to use credit cards and stick to debit cards when you shop.

Strikingly enough, the answer depends on what type of person you are when it comes to managing debts. Debit transactions come out of your own bank account based on your available balances, so you are not piling up debts. On the other hand, credit transactions are a short-term interest free loan or long-term high interest loan from your credit card companies.

If you have difficulty managing finances and are unable to pay off credit card balances in full each month, a debit card is definitely your answer when shopping because you can’t buy more than you can afford. If you are excellent in managing money and always pay off balances in full, definitely stay away from debit cards and always use credit cards.

Credit cards offer unsurpassed security, protection, guarantee, warranty, rewards, and much more that debit cards will not be able to offer. However, at the end of the day, all these features offered by credit cards will not make sense if you keep balances on them and pay skyrocketing interest month after month.

From my own personal experience, I will not put a single dollar purchase on my debit card, as it translates into me losing the opportunity to earn free miles or points towards my next travel. Used diligently, credit cards can be your friends towards earning free or partial travel that debit cards can never offer.

In my next book “Credit Card Hacks: What Credit Card Companies Don’t Want You to Know” I will discuss that and many other tips in detail. I am expecting to get this book out in 2016.