Do you know when it is better to use your debit card rather than your credit card?
A debit card spends money you already have while a credit card spends money you can borrow, up to your approved limit.
Brittani Forbush of Mountain America Credit Union explained some pros and cons of using debit and credit cards.
The pros and cons of debit cards:
- They can all fit in your wallet, but not all cards are created equal.
- A debit card allows you to make a purchase by withdrawing money directly from your account. Therefore, if there is not enough money in your checking account, the transaction may not clear.
- This helps you stay within your spending limits and gives you a safe way to not overspend.
- In addition to traditional debit cards that draw funds from your checking account, Mountain America offers a MyExpress debit card, which gives you control over the amount of money attached to that card.
- As long as you have the funds available, a traditional debit card also allows you to easily withdraw money without interest, because the money is yours!
The pros and cons of credit cards:
- Credit cards are a line of credit – the financial institution picks up the cost of your purchase and you pay the amount back at a later date, plus interest if the money isn’t paid back within a specified time.
- Credit cards have a preset limit that limits the amount you can charge the card.
- An interesting benefit of credit cards is that many offer points or rewards. This allows you to travel and have other experiences. Some may offer cash back on everyday purchases, giving you built-in discounts on things you already buy!
- A credit card also helps establish a credit rating. When balances are paid regularly each month, it signals to the financial institution or creditor that you are trustworthy and reliable with your finances.
- The financial community has seen an increase in fraud. When shopping online, we strongly recommend that you use a credit card.
- Because debit card purchases are withdrawn directly from your checking account compared to credit card purchases where the money is paid by your financial institution. If a fraudulent transaction is processed on your credit card under the Fair Credit Billing Act, you have more time to dispute the charge.
If you’re wondering which card is better, well... having both cards in your wallet can provide greater flexibility! Remember that spending with either card requires discipline. Stick to your budget, track exactly what you spend, and pay off your credit card each month to avoid unnecessary interest charges.
Mountain America has partnered with BYU to offer an exclusive BYU debit and credit card! Visit your local branch for more information.
For more information, you can visit macu.com/byucard or call 1-800-748-4302