Debit Cards Are Not Credit Cards

The best alternative to a credit card is a debit card. Sounds negative, doesn’t it? It is swiped just like a credit card and has magnetically-coded information on it but there the similarity ends. You get a debit card from the same bank you have your checking or savings account. The debit card is more like a checkbook substitute than anything else. When you make a purchase with a debit card, the amount is backed out of your checking or savings account. But, just like a credit card, you have to keep your receipts safe and record the amounts you purchase. If you lose track you overdraw your account and you know what that means—humungous fees!

The advantages of a debit card are many:

• You don’t need to carry cash except for the copy machine and possibly bus fare. Laundromat, too.
• You can use it to shop on the internet or by phone.
• It works whether your purchase is recorded as ‘credit’ (you sign the slip) or ‘debit’ (you key in your PIN). The net result is the same; the money is backed out of your account.
• It keeps you from losing your head and buying too much.
• It gives you the same shopping credibility as credit card users.

There are a few other things to know about a debit card. While there are no actual disadvantages:

• Know that your account may be vulnerable if your card is lost or stolen. Check with your bank to know how to protect yourself from fraud and what the limits of your obligations are if you are victimized. Just as with a credit card, check your bank statement against the receipts you keep religiously, (you do, don’t you?) to make sure you haven’t been charged for something you didn’t buy.
• Debit card use does not build up your credit rating. There is no logical reason for this since the use of a debit card requires responsibility. It’s probably because you’re not actually borrowing and promising to pay when you purchase with a debit card—you are, in fact, paying.

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