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Consumers Encouraged to Use Credit Cards Over Debit
Posted on February 1, 2012
There have been a lot of news headlines over the recently released card by Suze Orman, personal finance expert. Many consumers believe using debit cards keeps them out of debt and avoids high interest rates. However, if you are intent on repairing your credit score, using a card is a wiser move to make but you must do it responsibly.
Fraud is one reason consumers should consider when avoiding cards, especially when making online purchases. Debit cards do not protect you like credit cards can. If someone accesses your bank card information, they literally can access all of the cash you have in your account. Since many consumers do not notice until it is too late, this can be detrimental to your overall finances.
Another concern of personal finance experts is the lack of credit rebuilding power associated with a debit card. When you make purchases on a debit card linked to your bank, you are doing nothing to increase your own score. This can be dangerous, especially now when many industries are relying on your score to make decisions. Credit scores are becoming increasingly important and it is vital to consumers that their score stay in the 730 range to get the best interest rates and other option within financial services.
Personal finance experts also caution consumers on the limitation of debit cards. For instance, having only debit cards can make it difficult to make reservations for hotels and rental vehicles. Most companies in these industries require a consumer to have a major brand-name card to make the reservation.
While credit cards have been a big problem for consumer’s personal finances, there is a renewed encouragement to learn how to utilize cards for your benefit rather than avoid them in the interest of debt. Consumers have to learn how to pay their card balances in full each month and avoid impulsive spending on the card just because they have certain credit limits.
A credit card is a vital component of a healthy financial life. It makes sense to use credit cards for its benefits and other perks on a limited basis so you can be sure you can afford a full and timely payoff.
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