There are financial perks to using your credit card such as rewards dollars/points, building your credit score, and just the mere convenience, but it takes lots of discipline to limit your spending in order to be able to pay the balance each month. Rolling over your balance to the next month and paying high interest leads to financial downfall. Memories of only making minimum payments and worrying about when the balance would ever be paid off still haunt me to this day, swearing to never go there again.
When you use your debit card you are only spending the amount that you have in your account for the month. They payment is immediate and you cannot go into debt right off the bat. It allows you to budget in your utilities, mortgage payment, car, payment, insurance, and your allotted spending on food, gas, entertainment. With a credit card it’s a seemingly endless supply of money and it’s easy to charge items that you wouldn’t necessarily purchase if you used your debit card, thus carrying a balance and paying interest.
Just like a credit card, your Visa or MasterCard are accepted everywhere and eliminates the need to carry cash, just try and avoid using the ATM as often as possible, as those $3-4 per transaction fees do add up over the course of the month. Budgeting for how much cash to carry for spending money each week, your own personal allowance if you will, will avoid an extra trip to the ATM.
A Few Places to Avoid
Although debit cards are great to keep your spending on track, there are instances when using your debit card could surprise you. If you’ve ever tried to check in to a hotel room or book a rental car, there are significant holds that go on your account. With a credit card they are removed within a day or two without noticing a difference, but with a debit card the hotel could take almost a week to remove, thus tying up the money in your checking account until the hold is released.
If you are just now starting to plan for your financial future or if you’re just more comfortable not charging to a credit card, then you definitely cannot go wrong using a debit card. Although not as lucrative as credit card rewards, debit cards are also offering rewards points for every dollar spent on purchases, so you can look forward to receiving gift cards for gas, retail, and dining.