Things To Keep A Watch On When You Move To Debit Cards

Like many American consumers, you are probably getting wary about your credit cards. If you keep up with the latest news about the credit industry, then you know that credit cards are getting very expensive. The interest rates are rocketing as well as the fees. Using a credit card is very risky right now, especially if you are someone who is liable to miss a payment or two. Right now, one missed payment can cost you very dearly if you are using a credit card.

It would really be a great idea for you to move away from credit card spending as quick as you can. Credit cards are just becoming too risky for the average consumer. Besides, if the economic crisis should teach you anything, it should be the folly of buying things when you really don’t have the money for them, which is what most people end up doing when using credit cards. This is why debit cards are fast becoming the preferred option for consumers who want to use plastic for payments but don’t want to risk today’s high interest rates.

Usually, a debit card is backed by a bank account. In order for you to use your credit card, you have to have some money deposited in that bank account. This is because your purchases are made against the amount in that bank account.

While debit cards function similarly to credit cards, there are some major differences between them. If you plan to move to debit cards, you should be aware of these.

Unlike credit card, debit cards usually have less to offer in terms of rewards. So if you are interested in building up your points, you should probably research first what kind of rewards you are getting when switch to debit cards.

Another important detail to note is that when you are using debit cards, you are also prone to overdraft fees. Overdraft fees are common fee pitfalls for credit card users. They are usually issued when the credit card holder charges more than his or her available credit. For debit cards, overdraft fees are charged when you use your debit card for payment and you have not enough balance in your bank account. Your transaction will go through but you will also get fees.

Finally, debit cards have a different protection setup than credit cards. Most see credit card protection as several degrees better than what debit cards have to offer. It is probably best to stick to credit cards when making risky purchases such as when you shop online.