What’s the difference between a debit card & a credit card? I personally prefer debit. Here’s why!
What's a credit card?
- Credit cards allow consumers to borrow money from the financial institution up to a certain limit in order to purchase items or even withdraw cash.
- You are given your own spending limit, and have a monthly billing cycle
- Highly affects your credit score
- Charges you fees known as interest, which comes from what you owe. i.e. If you have a $250 credit card, your interest could require you to pay $300 back for their service instead of just $250.
If those credit cards aren’t paid off on time, or at all, that affects your credit score. A bad credit score is not good to big companies. Want a car? Want a house one day? You have to have good credit.
What's a debit card?
- A debit card allows you to spend money that you already have.
- Some debit cards allow you to use it like a credit card (spending without entering a pin code), but still it's with YOUR money that's in your account
- There's most likely no interest fees
I personally prefer debit cards for these of reasons:
- With a debit card, you actually are spending money you have
- You don’t have to worry about this extra credit card bill each month
- You can track your spending on your phone or online
If one were to get a credit card, here are a few things to consider:
- Spend wisely
- Don’t buy things that you know you won’t be able to pay back when the bill comes
- Pay your bills back in full every time to help build up your credit score
- Don’t get a credit card until you’re financially literate and ready
- When you buy something, pay it off immediately
Eventually, you’re going to need a credit card, how you use it is all up to you. A credit card isn’t for a haircut or some new shoes; it’s for emergencies and should be used as such. If you get it, be smart.
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Hopefully these tips were helpful! Do you have any? Leave some tips in the comments below! Meanwhile I'll be dabbing to the bank!