How to Decide between Getting a Credit or Debit Card
In this day and age, people use less paper, and more plastic. But which kind of plastic is best for you?
Up next in Credit & Credit Cards (16 videos)
Save money and stay out of debt with the advice in this Howcast video series about credit and credit cards.
You Will Need
- Awareness of your spending habits
- Knowledge of your credit history
Steps
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Step 1
Assess your finances
Ask yourself a few questions. What you want to use your credit or debit card for? Is it for convenience? Do you want buyer’s insurance? Do you want to improve your credit score?
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Debit cards are easier to get approved for than credit cards.
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Step 2
Gather information
Gather all the information. Be sure to read about all charges and rules on both credit and debit cards.
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Step 3
Choose a credit card
If you think you can pay off the balance in full every month, choose a credit card. It helps you build a credit history, and there are more perks, like rewards, cash back, travel and buyer’s insurance. You also get more protection if your information is stolen or lost.
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Step 4
Get a no-fee card
Choose a "no-fee" card with a zero percent interest introductory rate. Read any pamphlets and updates that the company sends, and pay your in full balance every single month.
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Step 5
Assess your habits
Be honest with yourself. If you are prone to accruing debt, a debit card is a good choice for debt deterrence, because they are directly linked to your checking account, and you will incur a penalty immediately if you overdraw.
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Merchants will ask you if you'd like "credit" or "debit." Choose "credit" to avoid entering your PIN number, which will protect you from identity theft.
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Step 6
Get a debit card
If you think you want a debit card, read the bank's policies to see what penalties there are for exceeding your account balance. Remember – you’ll have to keep close track of how much money is in your checking account. Now plunk your plastic with impunity!
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The first credit card was issued in 1951 by Frank McNamara, founder of the "Diners Club," for customers to use at restaurants in New York.
