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Everyone uses
debit cards these days. They are the new checks, but faster and
easier. Will they replace credit cards
altogether?
"For
those who use credit responsibly," writes Rich Mintzer on CardRatings.com. "credit cards are still king." You must use credit wisely and avoid
getting too deep in debt. Thirty percent
of your FICO score is based on debt-to-income ratio so it's important to avoid
late or missed payments and not carry big balances.
"Debit cards, since they draw from
existing funds in your bank account, are more for convenience than for
establishing financial trust," writes Mintzer, "and as such they aren't nearly
as powerful a financial tool as a credit card."
Credit cards give you purchasing power, says Mintzer. "Credit cards
allow you to make a large purchase, whether a major kitchen appliance or a down
payment on a new car, even if the funds designated for such purchases will be
forthcoming in your next paycheck."
Both
debit and credit cards offer protection from fraud, but
credit cards offer a federal mandate, limiting your liability in case of fraud
or identity theft. Plus the fact that with a debit card, the funds are taken
directly out of your account and will need to be refunded after the dispute is
settled.
Credit
card companies offer purchase protection that allows you to
withhold payment if there is a problem with your purchase that can't be
resolved through the merchant. "By contacting the credit card
company and disputing the charge, you can prompt an investigation that could
potentially result in a refund." writes Mintzer.
Extended warranties are a perk when
using a credit card. "Both Visa and MasterCard offer purchase
security policies good for 90 days after purchase, meaning that items are
eligible for replacement, repair or reimbursement if damaged or stolen." says Mintzer.
Most hotels and rental car agencies
require a credit card
to reserve a room or car. 'Those (rental
car agencies) that let you use a debit card to hold a car will place a hold on the
card, typically freezing anywhere from $200 to $500 in your bank account." warns
Mintzer.
Mintzer
says that, despite the growing surge in debit card use, it's safe to say that
the 181 million credit card holders in the United States, roughly 77 percent of
the nation's adult population, according to the U.S. Census Bureau, will likely
keep credit cards at the forefront of consumer spending power for years to
come.
Read 7 Reasons to Choose Credit, not Debit
at CardRatings.com.
photo credit: Daquella manera
Posted on August 11, 2011 07:13:23 by IPTV.Boyz
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