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Why I've Never Used a Debit Card

Unlike the majority of people, I’ve never used a debit card. Instead, I started my financial life on a credit card. I get a lot of questions about “why” or “how” I’ve done that. For me it’s easy, I get amazing rewards like cash back or points when I use my credit card. If you’re buying essential items such as food, hygiene products, gas, etc. month to month why not get cash back or benefits from it? 
 
credit cards
When I turned 18, I opened up a Visa Card through my credit union. If you’re getting your first credit card, I recommend getting it through 
your credit union or banking institute because you have an established relationship with them. Many credit unions and banks also offer a secured credit card, that is connected to the amount in your savings account. I see this as a more convenient route compared to a rewards card that comes from large national companies (Chase, Discover, Citi, American Express etc). I earn 1.5% cash back every time I use my credit card through my credit union. For me that can be anywhere from $50-$60 of cash back every few months! But, just because I had this “reward” doesn’t mean I should spend more. I just consider it a "bonus."

When I first opened up my credit card I used it for the “fun” things in life. Such as eating out and entertainment (I was still living with my parents at age 18 so I didn’t have many other expenses). Using it like this has allowed me to earn a good credit score and build my credit history just by spending a few dollars a month and paying off my balance in full. I stayed within my credit limit and only spent on small items. To this day I still have that card open and use it for everything. A lot of the time, I hear people talk about how they only use their credit cards for gas or emergencies. To me, that's silly because they end up spending the same amount of money for gas and food that they would have spent on the debit card, but they’re NOT getting cash back that they could have earned with a credit card. I believe that many people are afraid and don't have self-control while using a credit card. I’ve also noticed that many people don’t understand how credit cards work and think that they will be “in debt” when they swipe it. But that isn’t true, as long as you control your spending, stay within your credit limit, and pay in full on time you are golden. It’s so important to have a credit card and credit history. Here are some general tricks to using a credit card:
  1. Pay it off in full and on or before the due date
  2. Stay within 20-35% of your credit limit
  3. Control your spending- if you are getting rewards from it, don’t let that be an excuse to overspend
  4. Try getting cards that don’t have an annual fee
  5. Read the fine print or CARD Act (The Credit Card Accountability Disclosure Act. This includes the interest rate, late fees, annual fees etc.) 
I would personally spend more using a debit card than a credit card. When using a debit card it automatically withdraws the amount you spent and if you don’t have sufficient funds in your account, your card can be denied or you could be charged an overdraft fee. Another problem when using a debit card is the potential to lose it. You may be thinking, "I can lose a credit card too what's the difference?" If you lose your debit card it's almost as if you lost cash. You will have a harder time getting that money back since the money is automatically withdrawn from your account. On the other hand, if someone stole your credit card you can call and dispute the activity, and usually the credit unions and banking institutions will remove the charges from your account. 

Using a credit card can give you a visualization of the amount accumulating during the month. For me, seeing that build-up puts a mental note in my head to “spend less.” If you don’t currently have a credit card, don’t let your worries get in the way of owning one. Having a credit card can benefit you in many ways, like earning cash back, free flights, or most importantly, having credit history for times when you need it (buying a house or car). If you have more questions regarding credit cards, please make an 
appointment with our counselors to see what credit card fits best in your life and needs.
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Last Updated: 7/30/20