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Advantages of using a debit card over a credit card
In today's world it is not always easy, or even possible, to pay for purchases using cash. Many people do a lot of their shopping online where it simply isn't possible to pay in cash, having a credit card is the obvious way around this; however it may be just as easy and cheaper to use a debit card instead.
There are many advantages to having a debit card, the first most obvious advantage is that you cannot spend more money than you have with a debit card. As any money spent comes directly out of your bank account, there is no possible way for you to spend more that you have in that account. There is also no way of going over your limit like you can with a credit card, which can be a costly experience as the credit card company will charge you for going over your limit.
Another great advantage of using a debit card is that you will have no interest to pay on your spending. If you have use a credit card you will usually be charged interest on any balance on the card until such times as the balance is cleared, again this can be a costly experience if you cannot pay the balance in full each month.
Another great advantage of using a debit card is that you will have no interest to pay on your spending, although you may be charged interest on your overdraft if you are using one. If you have use a credit card you will usually be charged interest on any balance on the card until such times as the balance is cleared, again this can be a costly experience if you cannot pay the balance in full each month.
Debit cards are especially useful when going to pay for expensive items as they save you from having to carry a large amount of cash. Many people don't like carrying cash as they feel it is too dangerous they worry that they may be attacked and the cash stolen. If the worst was to happen and your debit card is stolen it is extremely easy to cancel it and have a new one sent before any damage can be done by the thief. If a thief has spent some of your money you will usually get it back provided you have reported your card stolen in a timely manner.
If using a debit card rather than a credit card whilst out shopping you may find that you are less likely to buy things on impulse with the attitude that you can pay for it later, because with a debit card the money is coming straight out of your bank account. This may prevent you from purchasing something expensive that you don't really need in the first place and end up struggling to pay for it for months.
A debit card can be used just like a credit card, giving you all the convenience of a credit card but none of the bills or expense. You can use your card in store, online or even over the phone to pay bills etc. You can also link your debit card to online payment services like Paypal to make using your card online even easier. Many people find the convenience of a debit card something that they could no longer live without as there are so many advantages of using one.
Do you prefer to use a debit or credit card?
Another benefit of using a debit card is that many banks now offer reward programs to customers where you can earn rewards simply for using your card. These reward programs vary between banks but are often in the form of cashback which you can earn if you use your card in certain shops.
The debit card companies themselves (rather than the banks) also run competitions from time to time and the only thing you have to do to enter is to use your debit card within a certain timeframe. Some major banks are also running a promotion at the moment where they are refunding one debit card purchase a month to a certain number of randomly picked customers. Again all you need to do to be entered into this promotion is to use your debit card to pay for something and if you are one of the lucky people picked that month you will receive a refund for one of your purchases.
Of course there is no guarantee that you will win one of these promotional competitions and you of course should not go out and make a massive purchase in the hopes of winning a refund of that purchase, but it is a nice perk for those who are lucky enough to win.
Credit cards obviously have their advantages as well, but in many cases there are more advantages to using a debit card. If you can afford to pay for something in full you are almost always going to be better off using your debit card over your credit card.
There are some exceptions to that rule though, particularly if you are making a large purchase. Not only does using a credit card allow you to split the cost if you need to, but you are also protected by your credit card company. If something is wrong with your purchase and the retailer can't or won't help you, your credit card company will usually refund the cost of the item if it cost over a certain amount.
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I think the advantages/disadvantages may be slightly different on this side of the pond to be honest. Very few credit cards here pay rewards for example (although there are more starting to do this of late) and almost all the ones that do would incur a fee each year for having the card. However some banks pay cashback on debit card purchases (although less so than when I wrote this article originally).
I have known people to have money taken out their bank and get it back really quickly and I have known people who spent ages on the phone and weeks waiting to get their money back. Since most people don't have their physical card stolen these days it almost doesn't make a difference whether its a credit or debit card. You can reverse a debit card transaction really quickly if you spot it early enough, same with a credit card.
If you can afford to pay your balance in full every month that's great and you wont pay any interest, (as I did explain in this hub) however the fact of the matter is that most people don't do that and therefore they get charged interest which never happens with a debit card.
This article (which was originally written for another site from which I still have a whole load of as yet not re-published articles years later) did have a sister article 'advantages of using a credit card over a debit card' but I never did get around to fixing it up to publish it here.
Your points are clear, and you explained it well. But I have to disagree with your explanation for using a debit card over a credit card.
I use a credit card for most of my purchases. I feel safer not having to carry cash around with me. And I don’t pay interest as you had said. People who are good at controlling their expenses don’t go overboard. I always pay my bill in full, so there’s no interest charge. All credit cards start charging interest only on unpaid monthly balances.
You also said that if you lose a credit card, you can avoid lose of theft if you contact the bank in time. But the money taken out of your bank account by the thief is still gone until the bank gets it back. This can take a month or two. All during that time you have no use of your money.
With a credit card, you never have to pay the bill of charges run up by a thief when you report the card stolen. For that matter, you also never have to pay charges for items you enter as a dispute, assuming the dispute is settled in your favor. If not, the charges are added back. But if legitimate, you’re better off with a credit card. Because when you dispute a charge on a debit card, you already have paid for it and you have to wait for the dispute to be settled in your favor to get your money back.
I also like the advantages of rewards on credit cards. Most pay 2% back to you for purchases, but some as much as 5% in rewards. These can be taken as a payment towards the bill, or as gift cards for store we shop in.