Credit Cards, Debit Cards, Bank Cards- Which One Should You Use?

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Nowadays there are all kinds of currency that exist, and each has its own benefits. It may be confusing to choose what kind to use. Credit cards, bank cards, and debit cards all serve the same function: delivering funds when necessary. However there are advantageous ways to use each type of funding. Knowing those advantages can help a person save money and get the most perks.

The Differences between Credit Cards, Debit Cards, and Bank Cards:

  • Credit Cards- Credit cards are simply lines of credit given out to borrow. Credit cards carry different interest rates and the amount of interest paid depends on the rate and how long it takes for the card holder to pay back the money. Credit cards may come with perks such as cash back features, air miles, and no interest for a limited amount of time. Credit cards offer the convenience of being used almost anywhere, including abroad.
  • Debit Cards- Debit cards are cards that are linked to a bank accounts and so the funds come straight from a person’s checking account. These have no interest rates attached to them and offer the same convenience when it comes to accessibility as credit cards. But unlike credit cards, there are no perks for using debit funds.
  • Bank Cards- These are also known as ATM cards, like debit cards; the funds for these come straight from a person’s bank account, there is no interest when using a bank card, and there are no extra perks for using this type of funding. Bank cards let a person access funds only from an ATM machine.

When Is It Best to Use A Credit Card?

One should consider using a credit card only when they are sure that they can afford to pay back the funds that they are borrowing. Once they determine that, there are many situations where using a credit card is advantageous. The most important thing a person can do is pay attention to the types of benefits that their credit card company is offering for the year/month/week or day. These benefits change and using them to your advantage can help you get the most from using a credit card.  If a borrower can afford the monthly payment, here are a few instances that are best funded from a credit card:

For Everyday Expenses– Many credit cards offer a cashback feature which gives a person some money back for using their card. A credit card can be used throughout the day for expenses and then paid off that same day with a debit card to get the cashback. This is best when a credit card has a higher cash back rate.

For Air miles-Plane tickets can be expensive, if a person is planning a trip they can start using their credit card that offers air mile rewards to potentially fund their plane tickets.

Traveling Where Fraud is Possible– When traveling it may be best to stay away from using a bank or a debit card because fraud can happen. Since credit cards aren’t directly related to a personal account, it may be easier and less stressful to cancel the card/get the money back in case something happens abroad.

Making Large Purchases- Credit cards break down the amount an individual has to pay for an item into smaller amounts, making a large purchase more affordable and accessible.

When Trying to Build/Improve Credit– Having a credit card establishes credit which is useful for people who have none or are trying to build some. In addition, making payments on time can help improve a credit score.

When Is It Best to Use A Debit Card?

A debit card may be best used when a person wants to manage and completely control their spending. When a person uses a debit card they are using their own, budgeted money. For many, this reminder may stop them from spending more than necessary and can prevent a person from going into debt.

When is it Best to Use A Bank Card?

A bank card is best used when cash is the only accepted form of payment at a place. Bank cards offer a person easy access to their funds (as long as they are close to an ATM), and can be safer than using a debit or credit card, since cash is being exchanged. In addition, if a bank card is lost it is the only type of card that cannot be used for purchases. The biggest perk it offers is the safety of a pin number.

Funding can be made available in many ways, whether it is a credit card, bank card, or a debit card. All of these work a little differently and it is important to understand their functions before using them. Most Americans have access to these three different types of funding but are unsure when to use them. Credit cards are best when used responsibly for perks, and when financial safety is questionable. Debit cards are best used for those who don’t want the responsibility of credit and are just looking to work with the funds they have. Bank cards are best used when places only take cash. By knowing when and how to use all of these types of funding, a person may be able to keep their money safe, cut down expenses, and even a make a little extra money on the side.

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1Loan approval is subject to meeting the lender's credit criteria, which may include providing acceptable property as collateral. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by consumer. Loan proceeds are intended primarily for personal, family and household purposes. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

2Based on consumers who received a loan from LoanMart from February 2002 to October 2018.

3Application processes could take five (5) minutes to complete. Upon completion, a conditional approval may be given pending review of documentation. Funding time is based on the time from final approval following receipt and review of all required documents and signing, prior to 2PM PST on a business day.

4To exercise the right to rescind, the consumer(s) must notify the lender in writing by midnight on the third calendar day from obtaining the loan. Within one business day from notice of rescission, the consumer(s) must return any monies received and fees paid on behalf of the consumer(s) by certified funds.

5Lenders recommend and encourage consumers to pay early and often and more in order to avoid additional finance charges.

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