Most people have debit cards and they are usually linked to a checking or savings account, but few people realise that they are usually a much better choice than credit cards when money is tight. Why? For starters, read the first three articles in this series to learn about the dangers of credit cards, and once you understand that credit cards are the plastic devil, come back and learn how they relate to debit cards.

Pros and Cons of Debit Cards

Remember that debit cards are linked to one of your bank accounts, so you aren’t really borrowing money with the intention of paying it back later. You are spending though, so make wise decisions about the right time to use a debit card or you’ll wind up over-spending. This leads to overdraft fees and similar charges from your bank, and they can be devastating to overcome.

Another pro to using a debit card is that sometimes you earn rewards from your card issuer, such as bonus cash for spending certain dollar amounts or cashback rewards in some cases. Don’t spend with a debit card just to earn the rewards though, because this too can lead to frivolous spending that sends you out of your budget’s atmosphere in no time.

One con to using a debit card is that it’s easy to use. This sounds like a pro, but it really isn’t, because convenience often means bigger spending. It’s so easy and convenient to swipe the card for fuel, paying bills, or making personal purchases, but keep a running total so that you don’t overspend. When you are paying things with cash, you can see exactly how much you have left at any given time, and this often-sobering thought keeps people from spending more in some cases.

Another con is that some places do not accept a debit card, so you’ll still need a small amount of cash in your wallet. Deduct this petty cash from your budget so that you don’t double-spend the money and wind up over-drafting your account.

Comparing to Credit Cards

Credit cards are potentially evil traps that lure you into spending excessively without the means to repay it any time soon. With hidden fees and interest rates, you’re quickly at the card’s spending limit and struggling just to make the monthly minimum payments. Since you’ve borrowed money instead of spending what you’ve already earned, each month sinks you farther into debt, and this cycle can be stressful to say the least.

There is really no question which method I’d recommend—ditch the credit card and use a debit card if you absolutely have to have some plastic. More people shop online today than ever before, so having some sort of plastic is probably a good idea, but be responsible with it. After all, it’s still your pay-cheque spent every time you swipe that card.

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