Do you know when it's better to use your debit vs. you credit card?
A debit card spends money you already have whereas a credit card spends money you can borrow, up to your approved limit.
Brittani Forbush from Mountain America Credit Union explained some pros and cons about using debit and credit cards.
The pros and cons of debit cards:
- They might all fit in your wallet, but not all cards are equal.
- A debit card allows you to make a purchase by taking money directly from your account. As a result, if there is not enough money in your checking account, the transaction may not clear.
- This helps keep you within your spending limits and gives you a secure way to not overspend.
- In addition to traditional debit cards that pull from funds in your checking account, Mountain America offers a MyExpress debit card, which allows you to control how much money is attached to this card.
- As long as you have the funds available a traditional debit card also provides the ease of withdrawing cash with no interest--because the money is yours!
The pros and cons credit cards:
- Credit cards are a line of credit—the financial institution fronts the cost of your purchase and you pay back the amount at a later date, plus interest if the money is not paid back within a specific amount of time.
- Credit cards have a pre-set limit that restrict how much you can charge to the card.
- A nice perk of credit cards is that many offer points or rewards. This enables you to travel and enjoy 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 build a credit score. When the balances are paid off consistently each month, this tells the financial institution or creditor that you are trustworthy and reliable with finances.
- The financial community has seen a rise in fraud. When making online purchases we strongly recommend using a credit card.
- Because debit card purchases withdraw directly from your checking account vs credit card purchases where the money is up fronted by your financial institution. If a fraudulent transaction is processed on your credit card per 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! Just remember--spending with either card requires discipline. Stick to your budget, keep track of exactly what you’re spending and pay off your credit card each month to avoid any unnecessary interest charges.
Mountain America has partnered with BYU to offer an exclusive BYU Debit and Credit card! Visit your local branch to find out more information.
For information you can go to macu.com/byucard or call 1-800-748-4302
