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HomeBlog Financial LiteracyHow To Know When To Swipe Debit Vs. Credit
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How To Know When To Swipe Debit Vs. Credit

December 17, 2018 by Arsen Libanov

learn when to use debit vs. credit
person shopping and deciding to use debit vs. credit

If you’re like most Americans, you have a mix of credit and debit cards in your wallet and probably a bit of cash. Do you find yourself wondering which card to use when it comes time to make a purchase at the gas station or grocery store, or when it’s time to pay your cable bill? If so, you’re not alone. There are considerable differences between credit and debit card transactions. You should always compare the advantages and disadvantages of each card type, so you can determine the best times to use a credit card, and when a debit card may be a better choice.

So, let’s see which card wins, debit or credit, in the following situations.

1. Staying Out of Debt

Winner: Debit Card

One of the best reasons to use a debit card is to avoid going deeper into debt. Americans rely heavily on their credit cards these days, and as a result, many are carrying high levels of debt. In fact, the average American household now carries $16,000 in credit card debt from month to month. If you’re having issues with debt, the best way to address it is to stop relying so much on your credit cards. Instead, make all your day-to-day purchases with a debit card tied directly to your checking account. This ensures that no additional purchases you make add to your already-high debt levels, and it could give you a fighting chance to start paying off those high balances on your credit cards.

2. Online Purchases

Winner: Credit Card

Online financial crime is rampant these days; unfortunately, if you rely heavily on your debit card when you’re buying items from a new website you just heard about, you may be vulnerable to fraud, theft, and other illegal activities. If a thief gains access to your debit card info, all the money in the checking account that card is attached to may be at risk. If you find out about it too late, it may be difficult to recover any of your stolen funds. This may be the reason that debit card fraud is currently on the rise.

On the other hand, your credit cards aren’t directly tied to your savings or checking accounts, so thieves who gain access to your cards cannot steal any funds that directly belong to you. All they can do is charge a debt to you against the credit card account. Additionally, many of the popular credit cards offer excellent fraud protection. The best cards limit a borrower’s liability in the event the card is stolen or used fraudulently. So, find a credit card that offers excellent fraud protection, and use it whenever you purchase something online.

3. Hitting the ATM

Winner: Debit Card

Most people make frequent use of ATMs to get cash. In fact, about 40% of Americans withdraw money from ATM’s 8-10 times each month. Whenever you need to make a withdrawal from an ATM, it makes more sense to use a debit card, assuming you have the money on hand in your bank account. After all, whenever you use your credit card to withdraw cash, you’re actually borrowing money from a lender and accruing an interest expense. Other than a potential ATM fee, which you can often avoid if you draw funds from an ATM affiliated with your bank, withdrawing funds via your debit card doesn’t actually cost you anything.

4. Paying Taxes and Utilities

Winner: Debit Card

When you have to pay a tax bill of any sort, you should always use a debit card. Municipal, state, and federal governments often charge a convenience fee on tax bills paid with credit cards. It typically equates to about 2% of the overall tax bill. However, if you use a debit card to pay your taxes, there’s usually just a flat fee of about $3 for the transaction. Using a debit card when it’s tax time can definitely save you some serious cash in the end. To save even the small debit card fee, just pay via check.

Similarly, you should also use your debit card when paying your electrical, gas, or water bills, as public utilities are often permitted to charge an additional fee when you use a credit card. Additionally, whenever you use a credit card to pay for your utilities, you’re going to rack up additional interest charges unless you pay off the entire balance, which can eat into your household budget significantly over time.

Choose Your Plastic Wisely

Credit and debit cards each have advantages and disadvantages, depending on the situation, so you should always take a second to think about the best way to make a payment. Using the tips here can help you determine the best way to pay a bill or tab. They can also help you avoid unnecessary expenses and keep your bank account safe from fraud or theft, which will give you something even more valuable than money: peace of mind.

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About Arsen Libanov

Arsen is the Chief Sales Officer at National Debt Relief and has been with the company for almost 10 years. He uses his charisma and passion to lead one of the most effective and compassionate teams in the business. Having spent so long in the industry, he is extremely knowledgeable in the debt settlement space. Arsen is a graduate of the University of Phoenix MBA program.

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[email address is thomassabrina21@yahoo.com] Easy National Debt Relief Caller: Nocona Transcribed WE 2/28/2021 Nocona: The call is recorded. Tell me a little bit about how you found National Debt Relief, and why you chose their program over some of the others that are available. SABRINA: Okay. Well, they were the second program I looked into. How did I see them? I think, a random email or something like that. I found them myself on accident. But they’re the second one. ‘Cause the first one said they couldn’t work with people in Washington State. I have no idea why. And then, they said the state couldn’t do that. And then, I found National Debt Relief, and they were like, “I don't know what they're talking about. We can and we will.” And they did, and they're doing an awesome job. Nocona: Can you tell me a little bit about what communication is like, how you feel about customer service, and what they were like to go through this process with? SABRINA: The initial process was easy. And the person was very competent and reassuring, too, because I needed to be reassured. And then, all the customer service since then, if I need to get ahold of them, I give them a call, and they answer. And it's stellar performance on their staff. And when they see a problem, anything, they give me a call too. Nocona: So they’re pretty proactive when things come up? SABRINA: Yes. Nocona: Is there anything at all that you think they could be doing to make the customer experience easier or better, anywhere you'd like to see them make changes? SABRINA: No. I don't see how they could improve. They're great. They've taken so much weight off my shoulders, you don't even know. Nocona: I think I know, probably, how you’ll answer, but I have to ask. If you could rate the program that you've gone through, between one and five, five meaning you'd recommend National Debt Relief to other people, one meaning you're very dissatisfied, how would you rate them? SABRINA: A 5. And you are correct, you did know. [Laughs] Nocona: Do you have any advice for people that have to go through this kind of experience, anything that you think is helpful to be aware of upfront? SABRINA: Just to make sure you have all your bills, that you know what you want, even though you can add later. So it's really not that big of an issue, because you can call them back. But the original adjustment of how much money is going to be taken out and stuff, it’s best if you just have it all together in the first place. Nocona: So, be prepared when you’re going into it. SABRINA: Yeah. In fact, when I first started doing it, I was having them take it out twice a month or something. I forgot. Anyway, I changed it to where they only take it out in the beginning of the month, all of it. And that happened immediately with zero issues. So like I said, they work really well with you, and they listen to you, and they get things done. Nocona: Is it okay if we share your comments as a review for National Debt Relief to help people that are thinking about going through a program like that? SABRINA: Yeah, feel free to. Because if they’re having issues I would recommend this business up and down the block. Nocona: When we publish a review, we just use your first name. We don't publish last names or any contact information. And I'll send you a one time link to the review. That way, if there's something you need to add, or if you want to make an update or change as your experience evolves, you're welcome to do that. I have thomassabrina21@yahoo.com. Is that the right address for you? SABRINA: That is correct. Nocona: The call was recorded.

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