Credit vs. Debit Cards
Getting a debit and/or credit card is a common step in a financial journey, typically giving you more purchase power than cash allows. Cards let you to shop online, use digital wallets, and much more.
But which one should you pick, debit or credit? There are important differences to consider.
A credit card is essentially a short-term loan. You have a set limit you can borrow against, and you repay what you use, along with interest on remaining balances carried from month to month. This interest is determined by your card’s Annual Percentage Rate (APR), which accounts for the interest and any other fees associated with the card (such as an annual fee, if your card has one).
Credit cards are helpful tools when building a credit history and healthy spending habits, and they can also earn rewards such as travel or cash back.
A+ Tip: One potential drawback of credit cards is the potential for spending beyond your budget and taking a hit on interest on balances carried over month-to-month. Affinity Plus member advisors are here to work with members to build budgets that fit their lives.
A debit card is directly tied to your checking account, so any purchases you make with a debit card are deducted from your balance as soon as the transaction is processed.
Debit cards can help build responsible spending habits, because you can easily keep track of how much you’ve spent. You can also take part in automatic savings programs like Stash Your Cash. It rounds up debit purchases to the next whole dollar, then automatically transfers the balance to your savings account.
One downside is limiting purchase power to your account balance, which can mean larger expenses are out of reach.
A+ Tip: Affinity Plus debit cardholders earn MyPlus Rewards™ points for spending, and can redeem them for gift cards, merchandise, and more.
Spending, Your Way
Both debit and credit cards offer various ways to pay, from physical payment via a magnetic strip or chip to contactless options. You can also upload your card’s information to a digital wallet and make secure payments that way.
Think of your goals when considering a debit or credit card, like building a credit history or healthier spending habits, and do your research on each card’s options, APR and potential rewards.