 | Mark Kolarik is the President of the Kansas Teachers Community Credit Union, located in Pittsburg, KS, since 10-2002 and is a board member of the Kansas Corporate Credit Union located in Wichita, KS . He has been employed in the financial service industry for the last 31 years, having worked in several credit unions for 21years and 10 years in the banking industry. He holds a Bachelor of Business Administration degree from the University of Wisconsin-LaCrosse and is a Certificated Credit Union Executive. |
Banking & Finance
2012-02-28 11:43:57
What is better debit or credit cards?
A: You have a debit card that can be used like a credit card. Huh? Lots of people are not clear on the difference between a credit card and debit card.
What’s the Difference?
Credit. Every time you use a credit card you are borrowing money from a financial institution. The institution pays the debt to the vendor and in turn, you pay the money back to the institution. By signing up for a credit card, you agree to pay back the money that you borrowed, in addition to any interest drawn on the amount you borrowed.
Debit. Debit cards take funds directly from the money that you have in your bank account--in a sense acting like a check, just faster. With a debit card, you don’t have to carry cash or checks, and they provide instant access to your money and are accepted worldwide.
Debit cards are used much like credit cards. The store you are shopping at ‘swipes’ them, and you are normally given the option of signing your receipt instead of using a required PIN number (you can enter your PIN number if your prefer). You also typically don’t have to show a picture ID.
Which is Better?
It depends. The features that make debit cards convenient--instant access to your money, lack of a required PIN number and not having to drag out your photo ID when you use it--makes fraud that much easier. Unless reported quickly, theft of your debit card can quickly devastate your bank account.
In addition to stricter liability laws, credit cards also offer more consumer protection on purchases made. Use credit cards for very large or fragile purchases, and for objects that will be delivered to your home after the purchase. This gives you added insurance in case the purchase is damaged en route.
Credit cards are also a great tool for consumers that are seeking to establish or reestablish an attractive credit history. Responsible credit card usage can improve one’s credit rating.
Discipline Yourself
Probably the main thing to remember if you are using a debit card regularly is that it’s not just a card; it’s ready access to your money. Be as careful with it as you would with your wallet if it had the contents of your entire bank account in it.
