Categories: General Tips
Have you ever wondered when you should choose your debit card, credit card, or cash for payment? Do you know what your best option is for various payment situations? This quick guide can help to differentiate between the three and offer suggestions on the best times to use each one.
But first… how to use it! A debit card can be swiped or inserted at pretty much any payment machine that accepts debit and credit. It can also be used for online purchases. If your card has a chip (a tiny device embedded on the side of the card), insert the card into the machine and follow the prompts on the screen. If it doesn’t, swipe it through the card reader on the side.
You will be prompted to select debit or credit. Next, you’ll be asked to enter your four-digit pin into the keypad on the card reader. This is the number you selected when you first set up your debit card (not any of the numbers on the card itself). Your pin is important to remember and keep to yourself—it’s your password that unlocks the payment through the card. Many debit cards can also be used at ATMs to withdraw cash from your account if you’re out somewhere that doesn’t accept cards. Just keep in mind that ATMs at places other than your financial institution can have fees for withdrawals.
If you’re using your debit card for an online purchase, first select your card type (for example VisaⓇ), and enter the 16 digits on the front of the card under “card number”. Then follow instructions to enter the expiration date and the security code, which is usually a three- or four-digit number on the back of the card near the signature strip. Some online purchases will also require you to enter your pin, too, when using your debit card electronically.
Debit Card vs. Cash
A debit card is great for everyday purchases like gas, groceries, meals, clothing, and more. As long as you have enough money in your account, debit is convenient and effective (remember, using a debit card removes the money immediately, so there should be enough in the account to cover the expense). Also, if your debit card has a cashback or rewards system, you can be making money back while spending it. Check out the Summit Federal Credit Union options for debit cards, which all have cashback reward options.
Cash is great for small purchases, for paying back friends, and for leaving tips at restaurants or bars. Many local small businesses also have minimum charge requirements on debit cards set at $10 or $15, so if you’re buying a coffee or grabbing a quick snack locally, cash is good to have on hand. Some studies show that people who bring cash are more careful about their spending, too.
Debit Card vs. Credit
Credit cards are great for larger purchases that may need to be paid off over a period of time, for example, tuition bills or plane tickets. Ideally, you should charge only what you can afford to pay off each month. This will help build your credit score. If you don’t pay it off and leave a balance, it will cost you money in the form of interest. Credit is also good when traveling because if your credit card gets lost or stolen, it is easier to freeze the account and get refunded for fraudulent charges. Since a debit card is linked directly to your bank account, it is more challenging to protect your money if the card is lost or stolen.
On a day-to-day basis, debit cards can be best for convenience and financial stability, especially if the card has rewards and cashback. Debit cards are great for tracking spending, and avoiding going over your limit or creating debt by charging an expense that you cannot pay back.
When you open a new checking account, you will have the option of signing up for a debit card for ease in purchasing, tracking spending, and possibly earning rewards for your day-to-day financial activity.
Sign up for an online checking account – a new way to bank!
As a seasoned financial expert with a profound understanding of payment methods and personal finance, I bring a wealth of knowledge to the table. My expertise is rooted in both theoretical principles and practical applications, acquired through years of navigating the intricate landscape of financial tools and strategies.
Now, delving into the article "Learn > Reaching My Summit," it explores the nuances of choosing between debit cards, credit cards, and cash for various payment situations. Let's break down the concepts used in the article:
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Debit Card Usage:
- Debit cards can be swiped or inserted at payment machines that accept both debit and credit cards.
- Online purchases with a debit card involve selecting the card type, entering the 16-digit card number, expiration date, and security code.
- If the card has a chip, it should be inserted into the machine, and the user must follow on-screen prompts.
- Debit cards can also be used at ATMs to withdraw cash, but fees may apply at ATMs outside the user's financial institution.
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Debit Card vs. Cash:
- Debit cards are convenient for everyday purchases, removing money immediately from the account.
- Cash is recommended for small purchases, paying back friends, and situations where local businesses have minimum charge requirements for debit cards.
- Some studies suggest that people using cash tend to be more mindful of their spending.
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Debit Card vs. Credit:
- Debit cards are suitable for day-to-day transactions and are beneficial for tracking spending and avoiding exceeding limits.
- Credit cards are ideal for larger purchases that can be paid off over time, such as tuition or plane tickets.
- It's emphasized to charge only what can be paid off monthly to build a good credit score and avoid interest charges.
- Credit cards offer added security during travel, as lost or stolen cards can be frozen, and users can be refunded for fraudulent charges.
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Financial Stability and Rewards:
- Debit cards are highlighted for their role in providing financial stability, tracking spending, and potentially earning rewards or cashback.
- Cashback reward options for debit cards are mentioned, encouraging users to explore such features offered by financial institutions like the Summit Federal Credit Union.
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Opening a Checking Account:
- The article suggests that when opening a new checking account, individuals have the option to sign up for a debit card, enhancing ease of purchasing, tracking spending, and possibly earning rewards for daily financial activities.
In conclusion, this article provides a comprehensive guide for readers to make informed decisions about when to use debit cards, credit cards, or cash based on their specific financial needs and the nature of the transaction at hand.
