Make money with Google Ads... just like me!

Get the FACTS about Credit Cards...

Here is what you need to know...
   to break free of Credit Card Karma:

Credit Facts...
What is the Difference Between...
   Debit and Credit Cards?

What is most surprising to me about debit and credit cards is that most people are often very reluctant to use debit cards because they are "afraid they will not work" like credit cards... but they do work... here is how:

Credit Card Defined:

Credit means "add" because you are adding debt to your credit card account. Credit means "pay later" when the statement arrives or even later if you carry an outstanding balance. Credit means "interest bearing loans" because even if you pay right away... you are still paying interest. Credit means you can charge purchases up to the pre-defined credit card limit as long as you make minimum payments.

Debit Card Defined:

Debit means "subtract" because you are subtracting your money from your bank account. Debit means "pay now" because money is removed from your account within seconds after the charge is made. Debit card are called "check cards" because they are like writing a check... except that it clears instantly. Debit means you can charges purchases only up to 80% of your available bank balance.

Credit vs Debit for Sellers (Merchants)

* It's a Card: From the merchant's (seller) point of view, there is NO difference between them when it comes to processing payments. The merchant enters in the card card number, expiration date, and whatever other data is required.

They get an approval number or informed that the charged was declined (along with the reason why).

* Discount Amount: From the merchant's (seller) point of view, there is a difference in the amount they receive behind the scenes. The buyer pays the same amount whether debit or credit. Credit cards usually have higher discount rates (what the bank takes in fees out of the buyer's payment).

So most merchants (like me) will encourage you to use a debit card in preference to a credit card because they keep more from the sale. In other words, the bank takes less of the payment as fees from a debit card than they do from a credit card.

Credit vs Debit for Buyers (Individuals)

* Fraud Protection: This is the biggest difference between credit and debit cards.

In case of Credit Card Fraud:
- If the credit card is reported lost or stolen within 60 days,
   you lose $50 at most.
- Fail to report debit card lost or stolen after 60 days,
   all that happens is your credit card is frozen or terminated.
- The unauthorized charges are removed from your account...
   so you never "feel" it financially.

In case of Debit Card Fraud:
- If the debit card is reported lost or stolen within 2 days,
   you only lose $50 at most.
- If the debit card is reported lost or stolen within 60 days,
   you lose up to $500.
- Fail to report debit card lost or stolen after 60 days,
   you can lose everything in your checking account.

Here is Where Debit Card Fraud Really Hurts:
- Worse, if you have "overdraft protection" and
   it is compromised, you are now in credit card debt.
- Even worse, there is little protection where items were
   never delivered, defective, or misrepresented.
- Worst of all, it takes weeks or months for some banks
   to put the money back... so you "feel" it financially.

* Responsible Spending: Before you dismiss debit cards, consider that...

Debit cards force you to spend only what you have, to "pay as you go", and to be in constant touch with the state of your finances. The only real problem is that your debit card will allow you to access money that should be saved to cover a check which has not cleared the bank yet... so you risk bouncing checks and incurring fees.

Credit cards lure you into spending more than you have, to commit to big interest and fees, and to spend without thinking carefully about it as if it is "free" money. Credit cards are more vulnerable to theft (they are on huge databases which are constant targets of thieves) than debit cards (they are on local bank systems).