Credit Card or Debit Card: What's right for you?

If you are trying to choose between a credit card and a debit card, you should know the differences between the two. Debit and credit cards offer different services and each comes with advantages and disadvantages. If you are aware of what each card can offer you, you will have a much easier time choosing the one that best fits your needs.

Debit cards are linked with your bank account; you can only spend up to the amount you have. There's no credit, and purchases are immediately deducted from your balance. Debit cards are a good way to keep out of debt, and they keep you from having to carry large sums of cash. They are accepted widely, at both bricks-and-mortar and online merchants. However, if you did not sign up for overdraft protection, you will be heavily penalized for taking out more money than you have. They are a good source of quick cash, but you are limited to the amount in your account plus your overdraft limit, if applicable. What's more, many banks charge more for debit card use than they do for credit cards.

Credit cards aren't tied to your bank account- their limits are determined by the level of risk you present to the lender. Some people have such high credit limits that they could buy a house or a luxury car; credit cards are a good source of emergency cash because you can draw more than you have. They are a good way to borrow, as long as you can pay the balance in full each month. Credit cards offer a level of reassurance, because with them, you will have access to a significant amount of cash if something happens. In order to keep from falling into debt from credit card use, you will need to exercise some self control- it can be very tempting to think of your credit line as "found money" to be spent frivolously. If you can't pay the balance each month, you will face high interest rates, and if you take money out at the ATM you will be charged higher interest as well.

Credit cards and debit cards are both an excellent way to access your money anytime, anywhere. If you have a hard time keeping control of your spending, the debit card may be better for you, but if you have sufficient self-control, using a credit card can be a good way to raise your cash flow. Your individual circumstances will help to determine which one is right for you.