Is a credit card better than a debit card?

Question

I currently have a debit card and find it very convenient while making transactions at merchant dealers and online. But, most of my friends have a credit card and tell me to take one. I always think of credit cards as a way of getting caught in the 'loop of loans'. But my friend tells me that using a credit card is a good way to build a credit history. Please comment on this. And also tell me some good credit card companies.

Answer 1

Your friends are right in the fact that a credit card will build a credit history, but most people do not know how to manage using credit cards. Most people make purchases that they would not make if they were paying cash out of their pocket. They figure that they will just pay for it later. That is when people get into trouble. Most credit card companies will start a new customer out with a $2000 limit. That does not mean that you should use the whole limit. Credit cards should only be used for emergency purchases. Food, alcohol, clothing, and entertainment are not emergency purchases no matter how many college students will tell you otherwise. Do not get a credit card if you are not responsible enough to manage your money. My wife and I just recently purchased our first home and we had to use her as the primary applicant for our mortgage. This is because I have zero credit. I have never owned a credit card or had any type of loan besides a student loan. I am a college graduate that owns my own car and has a good job, but I am not a good canidate for a loan since I have no established credit history. Once again, your friends are right, but you need to figure out if you are ready for the responsibility of a credit card. I recommend applying for an MBNA Visa or Mastercard for your first card. They are very accepting of first time creditors. They just gave me my first credit card. :) Good Luck and God Bless.

Answer 2

N* (the previous poster) gave a great answer. But, I have something to add. If you are trying to establish credit, a debit card will do you no good. But, if you are simply looking for an alternative to writing checks or paying cash, a debit card is much better because you will not be paying interest on the purchases you make. Also, if you're using a debit card make sure that you are aware of any fees that the bank charges as well as fees that the place you are making your purchase from charges. These can add up and lead to bounced checks and costly NSF fees.

Answer 3

Credit cards are a good way to build some credit so long as you pay on time. They are bad because some people get carried away. I started off with a card I used to purchase gas only. Every time I'd fill up I put money aside to pay the bill in full each month. That way creditors see I can pay bills on a regular basis. Also try getting a contract cell phone to build good credit. Know your limits and spend only what you can afford.

Answer 4

Credit cards ARE NOT a good idea. When you have a credit card, you are borrowing money. Too many people get into trouble with credit cards because they begin to borrow more money than they can afford.

You can never spend more with a debit card than you have because it's attached to your bank.

Take a few moments and browse through Yahoo Answers in the 'Credit' section and you will find many people that are in financial trouble because they've borrowed money.

Building your credit is a myth. The only people that want you to build your credit are banks and credit card companies. You don't need a credit history to borrow money....ask your parents or grandparents. They borrowed money before credit cards and/or credit history existed.

Scott....

Answer 5

Yes, a debit card is an easy way to make transactions and live in today's close to "cashless" world. Having good credit is like having your right arm....for the rest of your life, you'll rely on both. It is OK to use a credit card as long as you are careful not to abuse it and just get carried deep into debt for purchases you can't afford. Use it wisely, pay promptly and yes, you'll have great credit. Great credit will be rewarding when you go to shop for a car, house or are in need of a loan for whatever reason.

Answer 6

That's all true. But credit cards are limited to $50 liability for you if someone uses them in an attempt to rip you off, whereas debit cards are not protected at all. With debit cards a thief can empty your bank account and the bank won't reimburse you.

But you're right, too. Borrowing money is never a good thing. A good compromise would be to use a credit card and religiously pay it off immediately.

Answer 7

There is good and bad. With a debit card, there is no interest. With a credit card, you can build your credit history but, if you don't pay off the bill each month, then you are paying interest.

Answer 8

get a credit card if you have no credit history. You do need a credit history if you ever want to buy a car or a house or any other large purchase. Just be careful, credit card companies are experts in screwing over consumers. Don't get cards that charge annual fees or have high APRs. Get ONE card, charge something on it, and pay it off. A good way to build credit is to use your credit card to buy groceries, then immediately pay it off.

Answer 9

go with visa or mastercard

credit cards usually offer rewards points (as can many debit cards) , and credit cards WILL build your credit higher so if you have the cash to pay them off eventually, go with a credit card. If you cant make the payments and get by on just the minimums, then stick with your debit card only.

Answer 10

if you've made it this far without a credit card, then dont' get one. you're right, they are more likely to lead you into debt/trouble. with a debit card you can only spend what you really have. stick with what works for you.