Debit or Credit: What to Choose?

By: Laura Reginelli

Debit versus credit. Sometimes it can be difficult deciphering between the two and knowing which one fits your lifestyle better. Both are relatively new to the financial world; however, debit cards have been available for a shorter amount of time. Either way, both options allow you the freedom of not carrying cash and still being able to make purchases. When deciding between the two there are a few things that you should acknowledge and take into consideration.

Credit: Credit cards appeared first in comparison to debit cards. Essentially when using a credit card you are using someone else’s money to make a purchase and then promising to pay the bill later. Most credit cards generally have very high interest rates, which can be a major drawback if you have trouble paying your bills.

Debit: Debit cards carry the same convenience that credit cards do but you are not borrowing the money. Instead the money from a debit card is coming directly from your bank account. This eliminates the hassle of paying the credit card bill or having high interest rates accumulate debt. When using a debit card you generally have a choice of how you want the payment to go through, either debit or credit. With debit you have to enter a PIN number and the money is taken directly from your account.

When choosing between debit and credit take a look at your spending habits and determine what is most important to you.

Sources: http://www.ehow.com/about_4762135_credit-vs-debit.html?ref=fuel&utm_source=yahoo&utm_medium=ssp&utm_campaign=yssp_art

http://banking.about.com/od/checkingaccounts/a/debitvscredit.htm

http://www.creditcards.com/credit-card-news/debit-or-credit-differences-1271.php?a_aid=1017&a_cid=1204