Credit Card vs Debit Card

credit card vs debit card

You’ve heard the phrase about a million times right before you swipe your card through those Point of Sale (POS) terminal at the grocery or department store. (By the way, why the crap can’t those things all work the same way? I have to guess the order of operation at each retailer. Do I swipe then press credit? Do I tell the clerk what I’m using first? Do I press cancel to use credit? You have two choices in this situation. (1) Ask the clerk, “what do I do?” and look like an idiot. (2) Take a guess, screw up the transaction, and get the eye-roll and sigh from the clerk and look like an idiot. Isn’t there some sort of POS terminal governing body?

But that’s not the point of this post. What I’m really asking is, do you use a debit card for most or all of your everyday purchases or do you charge everything on a rewards credit card? Me, I’m a debit card man. I’ve heard from readers and other PF bloggers that the credit card is definitely the way to go. I see a couple of reasons to go with both.

Credit Card vs Debit Card

Pro-debit:

  • Purchase comes out of your account immediately. This can be good and bad depending on how you look at it. Obviously you have a better idea of how much money you have in your account
    Credit Card Approval Criteria

    Criteria Credit Card Companies Use To Approve You

    if it comes right out. On the down side, you are losing the (admittedly miniscule) interest on that money.

  • It’s much harder to spend more money than you have.

Pro-credit:

  • You get the 20 days interest before the bill is due.
  • You get a complete list of all purchases made during the month in one place.
  • You get rewards (assuming you use a rewards card, and you should). (If you use my kick-ass bank, USAA, you get cash back for using your debit card!)
  • If you use Mastercard/VISA, you get certain insurance protections for buying stuff with their card.

Toss up:

  • Returns are the same for either.
  • Assuming your card is Mastercard/VISA branded, you get their liability protection for both types of cards.
  • You still have a fist full of receipts to do something with. (Five cent nickel has a good post asking how to deal with receipts. He’s also running a contest giving away some cool prices, so check it out)

When deciding credit card vs debit card for my next purchase, we use the debit card. I’d like to hear which method readers use and if I’ve missed any great reasons to do one of the other.

Credit Card Approval Criteria & Best Use of Credit Cards

Credit Card Approval Criteria

Credit Cards are small plastic cards that can give you financial flexibility. There are different types of credit cards that are issued by financial companies. Examples of these are business credit cards, student credit cards, and secured credit cards, among others. But before somebody gets approved for a card, a series of background check is performed first. And all credit card companies, including those providing online credit cards, use them.

Credit Card Approval Criteria Used in Issuing a Credit Card

  1. Creditworthiness. 
    Creditworthiness corresponds to a person’s good credit history. Creditworthiness also means that a person had good performance with his previous loans and was able to meet all his financial obligations with ease. Consequently, those with poor credit scores will experience difficulty in being approved for a credit card.
  2. Job. 
    Credit card approval happens after a person can prove that he is financially stable. This also means that he has a good job, preferably from a reputable company. He should also be earning enough to pay up his credit card’s revolving balance.
  3. Link to parents card.
    This is especially true with student credit cards. College students certainly have the need for funds to be used as their living expenses during their stay inside university dormitories. Even if students don’t have a steady job yet, they are approved for a credit card for as long as it is applied under their parent’s name.
  4. Verifiability. 
    This means that the personal data of a person, which includes but is not limited to, his residential and business address, social security number, contact numbers, and credit history, are correct and conformable. This gives financial institutions the ease of getting in touch with the credit card holder should problems arise.

How a Credit Card Should Be Used

  1. Always pay your bill on time.
    If you fail to pay your bill on time, you will be charged a late payment fee. And these fees could really come high. Most credit cards companies charge as much as $30 if you miss your deadline or if you can’t pay the minimum amount required at least. Not only that these charges add to your expenses. It will also cause a dent on your credit history.
  2. Try to pay your credit card bills in full. 
    If you always pay in full, you will actually make a credit card company pay you back for using their card instead of the other way around. On the other hand, if you choose to pay only the minimum amount every time, it would take you several years before you can fully pay your debt.