“Will that be Credit or Debit?”
Think about how many times a day, week, or month you get asked by a salesperson or a card reader if you’re paying with Credit or Debit. For many it’s a personal choice. Some prefer not to have credit cards, others like to rack up points for airline miles, cash back options and more.
Credit and Debit cards may look the same, but they are quite different, and both have pros and cons for using them.
A credit card uses money borrowed from a bank to make a purchase. The money doesn’t get deducted from your checking account. You receive a monthly bill from the bank issuing the credit card. If you pay in full before the grace period there are no charges, after you will typically pay interest to the bank for the use of their money and the privilege of paying back that money over time.
Advantages of using a debit card?
A debit card is a great way to stay on your budget, as funds are drawn directly from your bank account. If you don’t have the money to spend – there is no “borrowing” money from the bank and paying overtime with interest owed.
Debit cards typically have few or no fees. But you CAN overdraw your account and rack up some serious overdraft fees. About three-fifths of consumers who used debit cards do so because it feels more like using “real money.” Credit cards can also come with annual fees, late fees, and over limit fees in addition to the monthly interest where debit cards do not have those expenses attached.
Overall, it’s a great way to manage your money as long as you watch your balances! Using online banking is the perfect way to keep an eye on things.
Advantages of using a credit card?
There are many perks to using a credit card. For people trying to build or rebuild their credit, having a credit card and paying the balance off monthly will typically help your credit score. It also allows you to buy larger items and pay off over time, use in times of “money emergencies”, and will allow you to travel safely without carrying cash or the worry of someone stealing your card and draining your accounts!
All the buzz is reward cards. By using these cards, you can add up frequent flyer miles, get cash back on purchases or save points to “buy” items at no charge. You may also be eligible for extended warranties or insurance beyond the store or manufacture warranty provided by an item purchased.
In the event of lost or stolen cards, credit cards offer greater protection in most circumstances. When fraudulent activity is reported in a timely fashion, the charges can be reversed without any funds being deducted from the user’s bank account. With a debit card however, it could take several days to recoup any funds that have already been debited from the bank account. The Electronic Funds Transfer Act does give debit card customers protection from loss or theft – but only if the customer reports it within 48 hours of discovery. After 48 hours, the customer’s liability rises to $500; after 60 days there is no limit.
The Litchfield Bancorp Difference
If you are a Litchfield Bancorp customer, you already know how serious we take our fraud protection services. We provide market-leading fraud protection services to anticipate, address and help prevent security threats. Our FraudWatch services watch for suspicious transaction activity on your behalf, 24 x 7, 365 days a year. Want even more protection against fraud – download the My Mobile Money Access App and Get Peace of Mind with Transaction Alerts!
In the end, the choice to use a credit card, debit card or both is a personal preference! The key is to have a budget, be dialed into your accounts at all times to watch for fraudulent activity and enjoy the perks both have!
Stephen Yonych Jr.
Assistant Vice President, Watertown Manager