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Research Personal Finance: Credit & Debit Cards

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Shredded Cards

IMG_0317 trash the card by kainr, on Flickr
Creative Commons Attribution 2.0 Generic License  by  kainr 

Credit Card Statement Horror

Run Far Away!!!

Credit Cards

Credit cards are an excellent way to help build your credit and they provide benefits that other forms of payments do not have, but there are also many risks that you should be aware of before signing up for a credit card

·       Types of Credit Cards

         o   Major cards such as Visa, MasterCard, Discover, and American Express

         o   Store credit cards

·       Benefits of Credit Cards

         o   Builds Credit History and Score

         o   Receive reward points, cash back, frequent flyer miles

         o   Convenience

         o   Theft and fraud protection

·       Risks of Credit Cards

         o   High interest rates

         o   Could have yearly fees

         o   Universal default penalties

         o   Inactivity charges

         o   Late payment and over the limit fees

                  · Compounding interest

Debit Cards

Debit cards are used as the primary method of payment for many people, their are benefits and negatives of strickly using debit cards

   - While debit cards look like credit cards, they lack some of the benefits of being able to charge items.

   - Many are linked to your checking account and sometimes have 24-hour charging limits, which could prevent you from buying that $900 computer you've had your eye on.

   - Ability to act like credit cards if you sign for a purchase instead of using your PIN number, with the bank usually covering the difference between the amount in your account and the cost of your purchase.

         - However, when the bank acts essentially as a creditor in this manner, you can get slammed with sizable insufficient fund fees for covering your shortcomings.

   - Alternatives to debit cards linked to checking accounts are called prepaid debit cards, which are preloaded with funds and are designed to avoid the pitfalls of spending more than you have.

What type is for you?

What do you use to make purchases?

What type is for you?
Credit Card: 2 votes (40%)
Debit Card: 2 votes (40%)
Both: 1 votes (20%)
Neither - its all cash for me: 0 votes (0%)
Total Votes: 5

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