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These days, you have many choices to pay – e-transfers, card taps, apps and contactless mobile wallets, to name a few. But comparing just debit cards and credit cards, which is best? And how do you best protect yourself when making purchases?
Debit cards are a quick way to spend money directly from your checking account, allowing you to access your balance in real time. Because they’re deducting your money, there are usually no annual fees or interest accrued each month, which can save you quite a bit of money in the long run.
In addition, debit cards offer a variety of benefits that allow you to shop safely. In fact, most financial institutions automatically provide debit card monitoring and have an easy process in place to dispute unauthorized activity on your account. As long as you report fraudulent charges promptly, you'll be reimbursed quickly for any unauthorized debit card transactions. Banks may also provide a provisional credit for the disputed amount while the investigation is conducted – assuring you’re not without your funds during the dispute process.
Several banks also have built-in safeguards that can recognize unusual activity on your card and block suspected fraudulent purchases. You may receive a phone call or text message from the fraud department of your bank if they suspect unusual spending activity on your card.
If you’re making travel plans, be sure you alert your bank before you leave. Otherwise, you may receive a call (or even a hold on your card) until your bank confirms that you’re the one making purchases in another state or country.
At Gate City Bank, you can easily set spending limits, activate alerts and temporarily freeze your debit card in case it becomes lost or misplaced. Learn more about debit card controls.
Some banks also offer debit card rewards. With Gate City Bank, it’s totally free to sign up, and you can earn points on every purchase with your debit card. Then redeem your points for gift cards, cash back, airfare and more. See the perks!
Most credit cards offer some sort of incentive when you sign up: bonus points, cash back, airline miles – even future discounts at certain megastores! But what’s the big deal with using them anyway?
Credit cards allow you to make purchases without necessarily having the money to fund them. In fact, when emergency situations arise (like unexpected car repairs or doctor visits), having a credit card as a back-up can save the day.
Renting a car or booking a hotel also often requires placing a hold on a card. This is a great time to use a credit card, so the funds in your checking account aren’t tied up waiting for the hold to expire.
In a nutshell, credit card purchases are applied to a line of credit, and payments are calculated and billed monthly. Interest will typically be added for the convenience of utilizing that line of credit. Rates will vary based on your credit score and can range anywhere from a 0% limited-time introductory offer to nearly 30%. It’s important to read the fine print on all offers to best understand what type of rate you may have now versus your rate in the future.
Like debit cards, credit cards also have the potential to earn points with each dollar spent. Those points can be exchanged for trips, airline miles, cash back, gift cards and more. Depending on what’s most important to you, you can choose a credit card customized for your spending habits and preferences. Another perk!
Generally, credit cards better protect shoppers against fraud by covering fraudulent activities (sometimes up to a certain dollar amount or timeline). It’s important to note, however, that there are some banks that offer the same fraud protection for customers with debit cards – like Gate City Bank.
Remember, each time you use a credit card you are really taking out a loan – a loan that needs to be repaid. Because they are considered loans, credit cards can help raise your credit rating if you regularly pay your balance.
Using a credit card can work in your favor, but it’s important that you control your spending, make payments on time and avoid interest charges by paying your entire bill at the end of each month whenever possible.
Regardless of whether you choose a debit card or credit card, be sure to:
Look for “https” at the start of the web address and the small lock symbol in the address bar. This tells you that you’ve chosen a secure site with extra measures to keep your data and information safe.
Did you know you can have more than one checking account with Gate City Bank? Some customers choose one account for paying bills and daily expenses, while reserving a different account and debit card just for online shopping! This allows them to keep a lower balance in their shopping account, so if that debit card needed to be closed for any reason, it wouldn’t affect recurring payments for bills.
All Gate City Bank locations can print a new debit card in minutes. It’s easy to get two different designs, as well as title them however you’d like in online banking, too.
Save a paper copy, or snap a quick photo on your phone. Compare them to the charges that show up on your statement. Let your bank know right away if there are any irregularities.
To take full advantage of the protections and features that come with your debit or credit card, review your statements and don’t skip over the details.
Remember, making an educated choice on what card type to use – and when – can help you increase your credit score, rake in rewards and keep your finances fraud-free.
Next time you reach for your credit card, consider whether using your debit card could save you from interest charges, offer comparable protection and even help you budget better by using your funds in real time. Stop by any of our convenient locations, or open a new account online to benefit from all the debit card perks at Gate City Bank!
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