Your credit card is maxed out again and what do you have to show for it? A whole heap of items you did not really need and now that you actually have them, you realise you do not even really want them anymore either. Now you are faced with high interest to pay back the money you wasted on these unwanted items and are risking yourself a bad credit rating. Is a credit card really a good idea? For some people, credit cards are a useful item that is used in moderation, and paid back appropriately. For others, the temptation to spend on impulse items is far too strong and perhaps you would be better suited to a debit card.
Debit cards work in a similar manner to credit cards. The main difference between the two is that a credit card uses money you do not have, which is borrowed and paid back at a high interest rate. A debit card is linked to a normal bank account which instead allows you to spend only the money you already have. This means you cannot risk spending beyond your means, because if you do not already have the money, you cannot spend it. You may choose to have a debit card linked to an existing bank account, or as a seperate account you can transfer funds into, as you need it. Most major financial institutions offer debit card accounts these days, therefore they are simple to open and you do not need a credit history check to obtain one.
The other bonus with debit cards is that you do not have to pay high annual fees as you do with credit cards. Instead you may have a monthly account service fee of a couple of dollars, which is comparable to the monthly fees on your normal bank accounts. This means you are also saving money on establishment and account service fees that would come with a credit card and can at times be quite costly.
You can use your debit card exactly as you would a credit card. They are typically either Visa or Mastercard so you can use the debit card online or in person to purchase items that you would normally be able to purchase with a credit card. This means just because you do not have a credit card, you still get to purchase tickets for that upcoming concert you are eager to attend. Same perks, but minus the risks.
As debit cards use your own savings, there is no longer the same risk of impulse buying you would have with a credit card, where you end up spending well beyond your means. It also means nothing to pay back and no major stress when your statement arrives each month. Instead of struggling to meet minimum repayments, you have simply spent within your own means and eliminated the detrimental case of impulse spending on unwanted items. Overall a debit card is pretty much like a credit card minus the debt and a much safer option for anyone who still wants the freedom of shopping online or using a Visa or Mastercard for purchases.