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Here is a guest post by peter from the creditcardsassistance.com comparing debit card with credit cards. Creditcardassitance.com is a right source providing all the necessary information a person required to know about credit and debit cards.
Debit or credit cards, both constitute alternatives to carrying large amounts of cash upon you, plus taking benefits from the certain good offers. Certainly each type of card is designed for the same purpose: being able to pay using a card. But the background, the terms and conditions and other aspects differ at these two types of cards.
A credit card is good especially when you do not have a good savings account, but you would like to have access to cash and be able to pay your debts. In order for a credit card to be called advantageous, it should show at least the following options:
* Have a low annual percentage rate. Anything below 13.99% is considered a fair APR for a credit card. Certainly the lower the interest you have to pay for, the lower the overall cost of your loan
* Reasonable amount of credit. Too much credit is not good as it will lead you into the temptation of spending too much, while a too small credit is not enough for your needs. Also, many times it is not worth having a credit card with a very small credit, as the extra charges (interest rates, penalty fees and other) will raise the overall cost so much, it is not worth it.*Introductory rates. This is a very god feature of a credit card, as it will allow you a period of 6-12 months interest free. Beware however of the interest rate that is charged after this introductory period is up.*Low penalty fees. It will be hard to find a credit card offer that will waive low fees for being late with your payments, but these fees generally range $10-$40, so make sure you chose the lowest one.
Credit cards in general are a good option if used responsibly, which means paying on time in order to avoid accumulating too much interest payments. Credit cards are considered the unsecured type of lending, meaning there is no collateral backing up the line of credit. This is why a credit card is generally more costly than a debit cardamong others. With a credit card, if you avoid making payments, there is no collateral the lender can repossess, there is no banking account linked to it where from the necessary funds can be withdrawn in order to repay your debt.
Debit cards, on the other hand do require a sort of collateral, and this is most of the times having your banking account directly linked to the card itself. This basically means, you can pay with your card using funds from the account. Whenever there are no more funds, the card is unusable. A debit card is a good option for those who want to avoid falling into the pit of debt, but do have an active account where there are sufficient funds. It is really up to you, the consumer, which type of card will best suit your interests. Below is a comparison with pros and cons for both credit and debit cards:
* A debit card accesses your own money, while the credit cardaccesses bank funds
* It is a misconception that you can actually pay merchants only if you have a credit card. A debit +credit option card will do as well.* With a credit card you accumulate quickly debt; a debit card does not allow that* A credit card carries more extra charges and fees than a debit card* ATM cash withdrawal using a debit card may cost you nothing* ATM cash withdrawal using a credit card may cost you a significant percentage of the withdrawn funds* With a fair credit rating, but no savings account, you can access a credit limit on reasonable terms from a bank* With a bad credit rating, you are eligible for very costly credit limits* Interest rates charged play the major role in debit vs. credit cards controversy* A credit card may solve cash needs in emergency situations* In emergency situations when there are no sufficient funds, a debit card will not do* Used smartly, credit cards can bring advantages (rewards, points, airline miles, and so on)* However you use it, a debit card is “alive” only until you still have funds in your account* Responsible use of a credit cards helps re-build your credit rating and thus become a trustworthy borrower in case you need it in the future.TMM expressing our sincere thanks for such nice article written to our blog and hope this will give all the required information to our regular visitors and other readers as well.
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