After the credit expansion bubble burst in the world’s economy in 2008, more and more people in the USA are considering getting a debit card and/or using a debit card instead of credit. Why? The answer is simple, it is all explained by social mood. We will look into three factors that depend on your spending habits and determine what comes cheapest, credit card or debit card, in your particular situation.
The three expenses associated with debit and credit cards are: ongoing costs, penalty costs, and interest. We will compare modern debit and credit cards in each expense category. As a bonus, we will talk about the cash back feature which can offset many of these expenses, and can even make your purchasing through any type of card very profitable.
Many credit cards, especially ones with highest percentage rewards, carry an annual fee, which can range from as little as $40 to as much as several hundreds of dollars.
Most debit cards carry no annual fee 소액결제현금화. There are exceptions though. Chase card with up to 3% cash back rewards carries an annual fee of $25.
It is annoying when you are charged a late payment fee on your bank card statement. The late payment fees can be significant, as much as $40. Likewise, a credit card company can charge you an over-limit fee when you are charging the card beyond its maximum. Until the federal regulation prevented that starting in 2009, the credit card company could even charge you multiple over the limit fees in the same month. These fees are now limited to one per month.
Debit cards typically do not have over-the-limit fees. The bank would mostly just decline the transaction when your funds approach zero.
Interest charges on credit card balances can go as high as 30% although most people were able to bring them down to 15% or so. These charges are responsible for turning a $50 pair of shoes into $120 pair of shoes when you get in the habit of not paying the credit card balance back in full each month.
Do debit cards carry interest charges? Well, not until recently! Some debit cards, notably the ING DIRECT Electric Orange card, carry an overdraft protection, so you can go into the negative territory on your checking account. They may not charge you an “overdraft” fee, however, you will be charged the interests during the time of negative balance.
Credit cards are famous for enticing customers with perks such as frequent flyer miles, cash back rewards, trip rewards and the like. Cash back rewards range anywhere from a quarter of a percent of the purchase value to 5% on purchases in selected categories and even as much as 20-30% on purchases with select merchants.
Debit cards used to be a non-participant in the cash back bonus games. This has changed in the past few years. It is not uncommon to find debit cards with as much as 3% – 5% cash back rewards. Rewards like that can make even a debit card quite profitable!