When it comes to spending money, more and more people prefer to pay with a card over cash now. However, if you have a credit card and a debit card, which one is better for making most purchases? If you’re struggling with this question, you’re not alone. In fact, 32% of Americans don’t have any short-term savings.
When it comes to the choices most Americans make, most prefer using their credit card. If you were to ask them why, most would say that it allows them to hold off on parting with their hard-earned money. Credit cards also offer you better security. Using credit cards to make certain large purchases can gain you warranty protection as well. However, while credit is convenient, there is a dark side to the nature of credit cards. Most people who use credit cards are likely to spend significantly more. In fact, research by Value Penguin indicated that using a credit card over a debit card leads the user to spend 83% more! Furthermore, many credit card users are tempted to base their spending on perceived benefits over the price. Credit cards effectively entice users into being willing to spend more money, while offering the benefit of being able to still spend money while you’re waiting for your next paycheck.
Debit cards are less used than credit cards, but they have their own advantages. They are very simple to use and maintain. Unlike credit cards, debit cards don’t offer you a psychological excuse to spend too much money either. When you make a purchase with a debit card, you get to take the receipt and immediately feel the pain of your bank account shrinking. That being said, if you find yourself in a financial tough spot, you can’t borrow money with a debit card.
Another option is to use a credit card to make purchases, while making sure to pay them off the next day. That way you get the benefits of having a credit card, but without amassing debt.
