Debit Cards vs Credit Cards?

[Andreas]

Hello, smart people.

I currently have a debit card issued by my bank for use with my primary checking account. I've never found occasion to get a traditional credit card and don't have any desire to provide myself with opportunities to get into debt.

However, it has come to my attention that credit cards can be useful for building up that magical concept of "credit." Now since I'll already be establishing credit as I pay back my student loans, should I even consider a credit card or will this add unnessary complexity to my life? After all, my debit card can be used as a credit card. (a la credit or debit choices)

I realize that most people (at least, in the US) have credit cards, but if I modeled my life by following "most people" I wouldn't be building my own online business right now. I'd be focusing on "being normal."


Do you have a credit card, a debit card, or both? Why did you make that choice and would you go back in time and change your decision if you could?

What would you do in my place?

Thanks in advance!

[mintyway]

I have both.

At first I was very reluctant using the credit card, because, like you said, I didn't wanna be in debt. I used it only for internet purchases.

But what is nice with the credit card is that if you reimburse it on time, you have no interest. For instance, my report closes every 26th day of the month, and I have until the 17th of the next month to pay it off. Until then, no interest. Therefore it's a way to earn money, because during all this time the money is still sitting on your bank account and giving interests. On the contrary, using your debit card withdraws money instantly.

It may also be useful if you ever need a large amount of money urgently. You never know what can happen, so to me it's a security. Plus it's a must have for travelling or buying online.

So, as long as you keep track of your expenses and pay it off on time, I think a credit card is a good tool.

[seeker5]

Originally Posted by Andreas

What would you do in my place?

I have a credit card and a debit card. I never pay out of my debit card as I use that only for getting cash from the ATM. I pay everything that I can cash.

Nowadays, I use my credit card for online purchases only, and I pay my statement in full at the end of the month. I prefer using my credit card to debit card because I find it easier to monitor my statements and I believe there is more protection for credit cards then for debit cards. If my credit card number gets compromised, and I get a huge amount taken out, then oh well, I'll have to deal with the card company to prove it wasn't me. In the meanwhile, I don't have to pay that amount. But if my debit card number gets compromised, and my bank account is depleted....until I deal with my bank to prove I didn't do it, I have no access to my cash. Quite inconvenient if I'm traveling.

[Love]

I have both.

I don't really use my debit anymore, because I got a rewards credit card. So I pay off everything early, so there's no interest, and something comes my way every couple of months.

[1000feet]

I believe having a credit card would improve your rating, but I'm not sure by how much. Obviously it's not your only credit, but in a few years if you can show that the account has always been in good standing and paid off in full that will make you look better. People probably have more trouble with credit cards than student loans (since credit cards don't increase the probability of getting a job that pays well) so having one or two and not getting in to trouble would be a good sign.

Aside from that, I put everything I can through my rewards card. It's also nice to have a little time to pay it back interest-free.

[Meg]

Oh, this is my favorite topic, really.
I have a VISA debit card, a VISA platinum through my bank, and a Capital One Mastercard, and a Target in-store charge card (my first "credit").

Credit is super important to build up and maintain, especially at a young age. Buying a new car, buying a new house, its all based on your credit history.

There's a lot of Pro-Credit articles on my PF blog roll, like this one:
25 Reasons to Love Credit Cards | My Dollar Plan

And to be fair, here's a Con-Credit:
DebtFREE-Revolution » Blog Archive » Ways Credit Card Companies Separate You From YOUR Money

There was an article in Reader's Digest (January 2008) about debit cards too.
Debit Card Traps and Fees To Avoid: The Latest Target of Thieves | Scams, Frauds, Rip-Offs | Reader's Digest