How To Decide Between Getting a Credit or Debit Card

Howcast: How To Decide Between Getting a Credit or Debit Card

In this day and age, people use less paper, and more plastic. But which kind of plastic is best for you?

To complete this How-To you will need:
Awareness of your spending habits
Knowledge of your credit history

Step 1: Assess your finances
Ask yourself a few questions. What you want to use your credit or debit card for? Is it for convenience? Do you want buyer's insurance? Do you want to improve your credit score?

Tip: Debit cards are easier to get approved for than credit cards.

Step 2: Gather information
Gather all the information. Be sure to read about all charges and rules on both credit and debit cards.

Step 3: Choose a credit card
If you think you can pay off the balance in full every month, choose a credit card. It helps you build a credit history, and there are more perks, like rewards, cash back, travel and buyer's insurance. You also get more protection if your information is stolen or lost.

Step 4: Get a no-fee card
Choose a "no-fee" card with a zero percent interest introductory rate. Read any pamphlets and updates that the company sends, and pay your in full balance every single month.

Step 5: Assess your habits
Be honest with yourself. If you are prone to accruing debt, a debit card is a good choice for debt deterrence, because they are directly linked to your checking account, and you will incur a penalty immediately if you overdraw.

Tip: Merchants will ask you if you'd like "credit" or "debit." Choose "credit" to avoid entering your PIN number, which will protect you from identity theft.

Step 6: Get a debit card
If you think you want a debit card, read the bank's policies to see what penalties there are for exceeding your account balance. Remember -- you'll have to keep close track of how much money is in your checking account. Now plunk your plastic with impunity!