Debit Card Vs Credit Card

The Credit or Debit Debate Visualized Credit vs. Debit Card Use Through the Years $800 Billion 關 Credit Debit $600 Based on a sampling of $400 Visa credit and debit cards. $200 $0 1987 1990 1995 2000 2005 2008 Nilson Report/Wall Street Journal Pros and Cons of Credit and Debit Cards Credit Cards Pros Cons If you pay your bill off monthly, credit cards basically provide a 30 day interest free loan. Responsibly using your credit card also reflects positively on your credit history. And when it comes to fraud liability, Credit Cards provide you with a greater shield. There is a $50 maximum liability, regardless of when the fraud is reported. Unlike withdrawing cash with a debit card, most credit cards charge a high interest rate on cash advances regardless of whether you pay your monthly bill in full. And while credit cards offer more in the way of protection, they are nearly twice as likely to fall prey to fraud. But the biggest downside to using credit cards are the interest rates. If you don't pay your card off monthly, you'll be charged a varying amount of interest depending on your card. Here's a look at the true cost of credit card interest rates... The True Cost of Credit Card Iaterest Payments Balance = $500 Minimum Monthly Payment = $15 (3%) Time Until Paid Off Total Interęst Paid Interest 9% 3 years, 5 months $87.11 12.9% 3 years, 7 months $122.44 15.9% 3 years, 10 months $164.15 Debit Cards Pros Cons Unlike credit cards, with a debit card all you can spend is cash on hand, which means you don't have to worry about interest rates. Debit cards also provide On the downside, there is no financial benefit when using a debit card. Responsible use has no positive impact on your credit rating, but overdraft fees can still have a negative effect. When you use a debit card, your actual cash is exposed to both error and fraud. While you may be able to rectify these situations, it is much more problematic than dealing with an erroneous credit card charge. Also, there is less fraud protection available to debit card users. While many easy access to your money, without the risk of carrying cash. And even if your credit history is poor you won't have a problem getting a debit card. debit cards offer fraud protection, there is a limited window to make a claim. If you wait too long, you'll be stuck with the charges. Here's a look at a consumer fraud-claim time-line for debit cards... Debit Card Fraudulent Claim Time-Line Unlimited Liability $50 Limited Liability Up to $500 Date Fraud is Reported vs. Consumer Liability Within the First Two Days Within 60 Days After 60 Days Did you Know $2.5 Trillion Amount of yearly global credit card transactions performed at more than 24 million locations in more than 200 countries and territories. (Source: American Bankers Association, March 2009) Low Interest Rates 90% Percent of survey respondents who believe they had the same amount -- or less -- debt as the average American. The most important factor wher (Source: CreditCards.com survey, June 2007) choosing a new credit card, cited by 58 percent of respondents. (Source: CreditCards.com survey, June 2007) 3 in 4 88% Almost three in four surveyed say they don't bother reading the terms and conditions of their own credit cards. The percentage of consumers who admitted to immediately shredding or simply throwing out credit card offers they receive in the mail, (Source: CreditCards.com survey, June 2007) (Source: CreditCards.com survey, June 2007) 41% 10,000 Estimated amount of payment Percentage of American adults who gave card transactions made every second around the world. themselves a grade of (Source: Ameriean Bankers Assoeiation, C, D, or F on their knowledge March 2009) of personal finance. (Sourcer National Foundation for Credit Counseling, 200g Financial Literacy Survey, April 2009) 0000 000o 0000 o000 Credit and debit card fraud is #31 the No. 1 fear of Americans in the midst of the global financial crisis, 12/12 John Doe Kiplinger beating out terrorism, computer and health viruses and personal safety. (Source: Unisys Security Index: United States, March 2009)