Why Debit Cards can Improve Financial Health

Debit cards are a good way to get started on the road to improving your financial health. They can be used in most cases just like credit cards, but unlike credit cards, you are using money that you already have, rather than borrowing money, at least as long as you remember to opt out of any kind of “overdraft protection” that your bank may offer. Here are some of the differences between credit cards and debit cards, and why debit cards may actually be better for your financial health, in spite of their similarity to credit cards.

When you are paying for things with a credit card, you are essentially taking out a loan for whatever it is that you are buying. The money is available to you based on how credit worthy you are, and how well you pay things back. If you pay this money back right away, you do not usually have to worry about things such as interest charges, late fees, or any other fees that may be tacked on to your credit card. On the other hand, when you are paying with a debit card, you are paying with money that you already have. You do not have to worry about paying it back. You do not have to worry about interest charges, late fees or any other kinds of fees. In the end, you are better off, and have actually spent less money.

Credit cards can be very attractive to use in many cases. Some credit cards offer you more of a discount on their merchandise if you use them. They may offer cash back or rewards points that you can use for other things, thereby making it seem cheaper to use the credit card. However, by the time you factor in the interest charges, it occasionally comes out to the same price as buying with your debit card, but more often than not, it comes out to more than the price that you would have paid with your debit card.

Even when you are using debit cards, however, you have to be careful about your spending. Make sure that you check how much money is in your account before you leave to go shopping, and keep track of how much you spend while you are out. Write down how much you are spending, and save your receipts at least until things have cleared the bank. Also make sure to dispute any charges that may not belong to you or that you may have been wrongly charged for as soon as your possibly can. This is the part that makes a debit card better for your financial health than even cash. Cash can be spent by anyone if it is lost or stolen. When someone else uses your debit card, you can dispute the charges and not lose any money.

If used properly, debit cards are a good tool to help your financial health. You cannot spend more than you have like you can with a credit card. And, unlike with cash, you can dispute charges that do not belong to you if it is ever lost or stolen.