When is it better to use a Credit Card?

The average person had credit cards and a debit card and uses the credit card when making big purchases and the debit card to make smaller purchases. Why? What’s the difference? Is it better to use credit cards exclusively? Or, is it better to use debit cards exclusively? When is it really a better idea to use a credit card over a debit card?

imagesCredit Card Points

This is the best reason to use a credit card – points! When you have a credit card that give you points as an initiative to use them usually you will get 1 point for every dollar spent, but, sometimes 2 or 3 depending on the card. Accumulated points can then be used to purchase several different things depending on the card that you have. The downside: Credit cards that offer points advantages generally have higher interest rates and maybe a fee to be a member – remember to pay off your cards to get the most out of its points reward system.

Debit Cards Track Expenses and do not Charge Interest

With a credit card it’s easy to spend excessively, if you have a tight budget this can make it harder to stay on track. If this is the case for you, a debit card is probably a better choice since it takes the money right out of your chequing account, forcing you to keep track of spending.

Another stark difference between credit and debit cards is interest charges. Credit cards charge interest on any accumulated debt on a monthly basis. If you spend excessively on a credit card without paying it off you will incur interest and this may be a substantial amount based n your balance and spending habits. Debit cards on the other hand do not charge interest on purchases since the use your money to make them.

Learning how to use debit and credit cards responsibly is an important skill. If you are someone that cannot use a credit card responsibly then it’s best not to have one, if you frequently pay down credit cards so that interest is not incurred using a points card as much as possible can be beneficial.