Once you have a better understanding of credit and credit scores, it’s easy to get confused on when you should use your Debit Card instead of your Credit Card, and vise versa. If you’re making purchases that you can easily pay back, then paying on a Credit Card, earning reward points, immediately paying off the balance and building your credit score makes sense, but then why would use a Debit Card? Unfortunately, for most people, this is not the case.
Technically, when you spend on a Credit Card, you’re not spending your own money. This concept makes it really easy for Credit Card holders to excessively spend on their Credit Card and run up their credit balance.
If you don’t have an auto-pay, or use a service like Curu, it’s easy to forget when your Credit Card payment is due. When you use your Credit Card, and you are unable or forget to pay off the full balance, it will begin to accrue interest (i.e. the percentage of a loan amount that it costs to borrow money) and potentially damage your credit score. Missing a credit card payment will ultimately cause you pay more than what the purchase initially costed and have implication on your borrowing ability down the line.
Plenty of consumers prefer to only use a Debit Card because they usually have few or no fees of any kind, unless they spend more than they have in their checking account and receive an overdraft fee. When the desire or unexpected need for a large purchase occur, mentally, it’s easier to spend money that is borrowed rather than your own.
Although it’s technically “safer” to use a Debit Card to ensure you’re spending within your means, it is possible to have transactions declined due to insufficient funds in your account. This means, just like using a Credit Card, it’s important to spend within your means when using a Debit Card.
The problem with only using a Debit Card is you prevent yourself from properly building your credit score that can have long term effects on your financial future.
If you’re curious on when you should use your Credit Card, check out this blog.
If you’re ready to start building credit, Curu is here to help!
Sign up for Curu at curu.app or download on iPhone.
Once you sign up, Curu will automatically find the best credit card(s) for you using CardMatch™. From there, Curu will make sure you’re on the best path to credit score success by notifying you of any opportunities to properly build and improve your credit score.
If you have any credit related questions or want help with signing up for your first credit card, reach out to our customer success team at support@curucredit.com!
