Nowadays most people who have an Account someplace have debit cards. They’re a useful payment method that allows Access to cash withdrawals when needed. There are even countries considering the possibility of becoming cashless societies, because they use of payment cards and other systems is so widespread that cash is becoming irrelevant and its use is at historical lows.
Aside from debit cards, many consumers also have one or more credit cards. And when you shop and get to the register, you sometimes make a quick inner debate as to what method of payment you’ll use. Sometimes, you get to the cashier and are asked whether you’ll be paying with debit or credit.
There are a series of variables that should be taken into consideration when deciding which card to use, and you might not always be choosing the right reasons when paying with a debit or a credit card.
About debit cards
Debit cards access your checking/share draft account directly. Whatever you pay with these |
| Debit cards actually always have the word 'debit' on them. |
There are people who refuse to pay with debit cards, insisting in using cash; I find their utility unquestionable because wireless technology has made card payments possible in the most unusual places, from taxis to fruit stands in open markets. Additionally, with the monitoring systems they have in place at, for example, our Credit Union, as soon as there’s the slightest unusual activity on the card and if you did not leave previous notice that you’d be shopping some place different, they immediately notice, put a temporary block and wait to hear from you. That way they protect your money from unauthorized access. Plus the new EMV (chip) technology makes these cards virtually impossible to copy. If this is not enough, for those who like extra care, OAS FCU offers us eAlerts, a system that allows you to set types of transactions and amounts that you do not consider likely to happen, and if they do happen, you are immediately sent an email that basically says “hey, you said you wanted us to tell you if this ever happened, and it has: check your account to make sure everything’s OK”. For example, I have an alert to inform me of any debit over a certain amount that I am unlikely to spend in one single payment.
But as to when one should use a debit card, the answer is when doing your regular
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| For consumer safety, many merchants offer payment terminals you use yourself, so you don't hand over your card. |
Also, if you have one of OAS FCU’s Kasasa reward accounts, you need to make 10 uses per month with your debit card, and regular purchases will help you reach that goal.
There are times when using the debit card is not advisable because it means the automatic withdrawal of funds from your account; when there is a risk aspect associated to the purchase, that’s when you should consider plan B. Because if you request a refund of your purchase if something went wrong, and the merchant is giving you a hard time, you will have to wait a while to have your claim resolved before you get your money back.
About credit cards
When you pay with a credit card, the money doesn’t come from your account; instead, you generate a debt on the line of credit that is held under that card number. You pay monthly interest for that debt –although in the case of our Credit Union, if you pay the complete balance of purchases before the due date on their statement, you incur no interest.Credit cards also have the chip technology and a system of eAlerts (accessible via your
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| The safer bet when you need an additional guarantee. |
As you incur a debt, it’s logical to try to avoid using credit cards. However, there will be times when it will be more advisable to use credit than debit:
When shopping online. If you shop over the internet, your credit card offers automatic user guarantees in case you’re scammed. This means that if someone sold you an actual apple instead of the latest Apple (this did happen, read about it here), as long as you paid with a credit card you will get your money back.
Many credit cards offer additional warranties for cases when the items purchased break during use and the merchant refuses to refund you (this applies to any type of shopping, not just online). Many of these warranties extend beyond the manufacturer or merchant’s own warranties and it makes using credit cards for higher-priced purchases extremely beneficial. And because Visa credit cards have a 0 liability policy in cases of unauthorized charges and fraud, they are a very appetizing option in these days of rampant identity theft and cloning of cards.
Speaking of the Credit Union’s visa credit cards, remember that the Platinum card has a rewards system that works on point per dollar spent and you could use it for some regular payments in order to get points redeemable for travel, merchandise…
Like OAS FCU’s Visa Platinum card, other financial institutions and companies reward cardholders for certain uses: discounts in their stores, on car rentals, or rebates on certain articles. Careful use of those cards can save you money in the long run.
Till next month, my dear readers.
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