A useful distinction between credit and debit cards

It is rare to find a portfolio these days without a debit or credit card in it. Most people immediately throw out the brochure, with which usually arrive. Consequently, the respective advantages of these cards are not exactly common knowledge. The decision of which card to use generally is based on randomness rather clever financial strategy. Knowing where and when to use these two very different types of cards can drastically ease your personal banking experience.

A debit card draws money directly from one of your accounts established, usually a checking account. So, the money available for the transaction is finished and precipitated by exactly how much is settled in advance, through the regular income, personal checks, etc. Only use a credit card when you know exactly the funds available, otherwise the transaction will most likely be denied. Worse still, some credit cards do not have a stop function for lack of funds, meaning that instead of denial, the transaction will go through but reduce the money as a negative balance. Banks often pay an overdraft fee in addition to this annoyance.

If you are afraid of identity theft, use a debit card. Debit cards must be used in person, not online or telephone payments. So, are much more difficult to steal and will only result in your current funds run out, rather than a ridiculous amount of money lending tacked on to your account. If you are already in debt, your remaining credit or otherwise, use a debit card. This will stop your accumulation of debt and begin to rebalance your finances. Debit cards function as great reality checks and can interrupt the over-execution banking crisis staff.

Credit cards seem to be designed to take advantage of those who are less resistant to the car of over-spending. Need foresight and extreme personal responsibility. The best are used for transactions that cannot be accomplished by a debit card, for logistical impossibility (online or phone) or temporary lack of funds. Unless returned within a month or so, the usual grace period, banks can begin. Certain transactions as booking a hotel or restaurant tipping requires the use of a credit card. Still, for those who have the foresight and don’t want their money tied up, credit cards can be great tools to build personal credit for future banking opportunities.

The final message: learn before you pay. The distinction could save invaluable effort and lots of money. Personal Banking Officer requires the benefit of debit and credit cards.