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The Big Differences
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Many times people use the terms “credit card,” and “debit card” in the
same breath, but they are actually two very different things. A credit
card is just as it sounds; when you use it, you are making purchases
on credit. On the other hand, when you use a debit card, you are extracting
money from your bank account to pay for the purchase.
Let’s take a look at each one in depth.
Credit Cards
You may think all credit cards are alike, but just like fingerprints,
they differ greatly. Knowing that, it would only make sense to shop
around in order to get the best terms that you can find. Some people
pay their credit cards off in full monthly, and if you’re one of those
lucky few that can afford to do this, then you should probably look
for a credit card with no annual fee or one that offers bonuses to their
card holders. If you are the type of person that carries a balance on
your credit card, then you should look for a card that will charge the
least amount of interest.
The bottom line is that you need to know the terms before agreeing to
accept the card. Here’s a short list of those things that you should
ask (or read in the terms section of the paperwork)
* What is the annual percentage rate? Will it change after a specified
period of time?
* How long is the grace period? (That time between charges and when
the interest on those charges begins to accrue.)
* Is there an annual fee? Is so, how much?
* How are finance charges accumulated?
* What amount are late fee payments?
* Will I be charged if I transfer balances to and from this account?
* What are the fees on cash advances?
* What happens if I go over my credit limit?
In most stores or businesses, the retailer does not charge the customer
any fees for using a credit card. And Federal regulation gives the consumer
purchase protection. In other words, if you have a problem with merchandise
or services and make a good faith effort to reconcile that problem with
the seller to no avail; you have the right to withhold payment for the
merchandise or services.
Debit Cards
Over the last two years, the use of debit cards has doubled; often when
asked debit or credit; the answer is debit more and more. In fact, twenty
percent of all credit transactions are now done with a debit card. No
interest fees are charged on debit cards; however, at certain retailers,
they do charge a small fee for using them. Anytime you make a purchase,
the money is automatically withdrawn from your checking or savings account.
Debit cards look like credit cards and to a certain extent act like
one. But because the amount comes straight out of your bank account,
you may have a financial fiasco if a debit card falls into the wrong
hands or if you forget to deduct the transaction amount when reconciling
your account balance.
No matter which card you choose to use—a credit card or a debit card—you
will experience convenience and ease-of-transactions. Simply decide
what’s right for your life!
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with credit and mortgages; visit
Credit
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