In this modern day and age, owning an electronic money-transferring card is practically expected in the world. Hundreds of millions of people in the United States alone have at least one credit or debit card. There are a number of perks that come with having a credit or debit card, but with such convenience comes great responsibility.
Credit Card and Debit Card Responsibility
Credit cards and debit cards are both electronic ways of paying for things, but they have many differences. When working to repair your credit, it’s up to you to decide which type of card is better for you to have.
Credit Cards
About Credit Cards: By using a credit card, you are basically paying for something using someone else’s money. You will be responsible for paying back the creditor.
How Credit Cards Affect Your Credit: Because you are being credited money from someone else, the way you pay the creditor back will show on your credit report. If you are good with paying bills on time, using a credit card could have a positive effect and help repair your credit. If you aren’t so good with paying bills on time, using a credit card could worsen your credit history.
Other Important Things to think About: If you are someone who could be classified as a “spendthrift”, using a credit card might not be the best way to repair your credit. Even if you are good with paying bills on time, if you overspend using a credit card you might not be able to pay back the creditor, which will negatively affect your credit.
Debit Cards
About Debit Cards: When you use a debit card, you are using money that you already have. If you are using a bank issued debit card, the money that you use is directly taken out of your bank account. There is no one that you will need to pay back for using the debit card.
How Debit Cards Affect Your Credit: Using a debit card will not directly affect your credit at all. The only way your credit could be affected by using a debit card is if you overspend and don’t keep track of your finances. If you use too much money from your bank account and find that you don’t have enough left to pay your bills, your credit will be negatively affected because of the late/unpaid bills.
Other Important Things to think About: If you are careful and use great responsibility, using a debit card is a good way to improve your credit. Debit cards might not directly increase your credit, but they will at least prevent any negative credit from going on your credit report from not paying credit card bills.
If You’re Still Not Sure
If you have a habit of spending too much through a card and can’t decide which you should use, it might be best to just use cash. Having the convenience of a credit or debit card means that you need to keep track of what you spend. By having a certain amount of cash in your pocket, you know what your budget has to be. Once you improve on keeping track of spent money, then you can think about getting a credit or debit card.
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