Debit Card or Credit Card??

March 27, 2012

For my money, debit card all the way!

Why….I hear you ask?

When using a debit card the money comes straight from your cheque account, therefore if you don’t have the money, you can’t buy it! It makes all of your spending  conscious and eliminates the money fog! Even if it doesn’t eliminate it completely, it certainly doesn’t allow it to hang around! If you hadn’t planned the purchase, the next time you update your bank account and tracking ( you do track your income and outgoings, don’t you??) you will have to record, and adjust your budget or plan for the purchase.

On the other hand, if you use a credit card, the pain of the payment is delayed and the spending is more often than not, unconscious.  You don’t feel as though you are using “real money”, it doesn’t cause any immediate reflection or reaction and allows the money fog to close in, big time!! Most credit card companies allow you up to 55 days before you make a payment, so until that day comes around, or at least until the bill comes in, you can forget all about your purchase, and probably will.

A debit card  still allows you to shop online, or over the phone; excuses people use for needing a credit card.

When I discuss the issue of debit card versus credit card with clients, most  say “But I get airpoints, when I use my credit card”. That is great if you are paying off your credit card, in full, every time you use it. If you aren’t, then the interest you are paying would more than buy you the airpoints, or flights or whatever!

If you pay off your credit card every time and in full, this probably doesn’t need to apply to you.

However, if you don’t, then I strongly advise using a debit card.

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3 Responses to “Debit Card or Credit Card??”


  1. I prefer credit cards. There are many more consumer protections associated with them — fraud protection and limited liability, for example. Generally, if your debit card gets stolen and money is taken out, it’s a pain to get your money back. On a credit card though, your liability is usually limited to $50 and it’s the credit card company’s money that’s gone, not your own.

    Plus, the cash back rewards are unbeatable. I get at least 1% back on everything I buy, but up to 5% on some categories.

    Using credit cards responsibly also help you establish and maintain good credit.

  2. jillporter Says:

    Thanks so much for your comment. I really appreciate and hear your point of view.

    Many of my clients find credit cards far too tempting and can’t necessarily exercise the restraint required to use them, as you say, responsibly.

    I also have to say, that I am in New Zealand so speak from that perspective. I am unaware of any cards here which offer cash back. You have also encouraged me to check out the liability issue here, although I think it is the same. I will get back to you as soon as I have an answer.

    I stand by my opinion that, for people who have been unable to pay their credit card in full more than once or twice, debit cards are safer, and protect them from themselves!

  3. jillporter Says:

    Hi there,

    I finally have an answer for you. To the best of my ability I have researched this issue so that I could respond fully to you.

    It seems as though with a NZ debit card the liability you have is the same as for a credit card. Generally that is, provided you have fulfilled your responsibilities by not writing your pin number down, not sharing your pin number with anyone and reporting the transactions you are challenging immediately, you will not be held responsible for them.

    Hope this clarifies the issue for you and reassures my NZ readers.


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