Credit cards vs Debit cards, which is really better for your financial health and credit score?

Credit cards vs Debit cards, which is better for your finances? This will certainly spark a debate for those on each side! The truth is that Americans are quickly becoming cashless in our society. You can pay at the pump now at most gas stations around the country and where it once seemed odd or maybe in poor taste to use plastic for even that soft drink from you local convenience store, it is being done now with more regularity!

And that doesn't even come close to the millions of credit cards and debit cards used at several online stores and websites, such as Amazon and Ebay along with other popular e-tailers! Clearly having some from of cashless payment options are necessary to being a consumer in America and millions of people are using their bank cards linked directly to their checking accounts instead of credit , but is this really a wise move? The primary advantage to debit cards is that they give you instant access to cash, after all it is your own money. Credit cards begin charging you interest the moment you take out a cash advance on them. Debit cards allow you access to your cash at no interest since it is your money. The other advantage of debit is that they are an option for consumers who have credit problems and never thought about applying for a bad credit credit card instead! While it seems that everyone who wants credit can get it, it can be hard to get once you have fallen behind on your credit payments resulting in a "charge off". Since some type of plastic is required in our society, bank cards remain a viable alternative for those with no credit.

But there is a downside to debit too. Consumer advocate Howard Strong even refers to debit cards as those instruments of your financial death! His perspective could be a little over the top, but he does point out the disadvantages of debit cards usage in his book, What Every Credit Card User Needs To Know.

The first disadvantage is being able to use your creditors money interest free. This interest free period begins at the time you make your purchase and continues untill the due date of your bill or a grace period, typically 25 to 30 days after your purchase.

Secondly if you use your bankcard to make a purchase, let's say a new plasma TV for $2000, that money is sucked out of you account immediately! But by using credit, you would have up to 30 days to pay off that balance before you get charged the interest on your purchase! The advantage of this should be clear by now.

Thidly, using your bankcard has no positive effect on your credit rating or score and can actually have a negative impact if you have to many overdraft fees and Non Sufficient Fund charges. Eventually your bank will not like this and may even drop you for these activities since most people never bother to write down their purchases by their bankcards in their check book register!

And we haven't even discussed the positive effects of making your payments on time and demonstrating your ability to handle money responsibly. You may be handling your money responsibly by using your bankcard, but the credit bureaus will never know it and will only be alerted when you make to many mistakes.

Let's go on to the next page of credit cards vs. debit cards shall we?