The days of Mom and Dad filling your meal plan card and contributing to your checking account are behind you—now what? If you’re like most millennials, you may be thinking about getting a debit and/or credit card, but may not be sure which is right for you. The experts at leading Long Island credit union Suffolk Federal compare the pros and cons of each to help take the guesswork out of choosing the type of card that’s right for you.
- How they work: Debit cards use the money you currently have deposited in your account, so the pro is that you’re less likely to overspend. But if you don’t keep track of your finances, you may accidentally spend more than the balance in your account, resulting in overdraft fees. With credit cards, you borrow money from the card issuer who sets a credit limit, giving you the ability to spend money you may not currently have. Want to visit your bestie in another state? Why not! Emergency car repair? No sweat! Charge it to the credit card, and pay it off over time. However, beware of a tendency to overspend. If you max out your card or have a difficult time making the monthly payments, you’ll negatively affect your credit score.
- The “extras” they offer. Although you can get cashback perks with some debit cards, credit cards generally offer more rewards. When applying for a credit card, look for one that’ll reward you the most. Some offer you 1% back on all purchases and a points system that can be applied to discounts on travel, merchandise, cash and gift cards. Those perks and discounts can really add up.
- How you’re protected. When using your card—especially if you frequently shop online—you’re going to want to be protected from fraudulent purchases. Generally, credit cards offer more security because you have time to report the fraud before the transaction hits your account. With debit cards, the balance in your account is affected when the transaction is completed—although you can stop unauthorized use by immediately reporting any suspicious activity (your financial institution should be watching as well). Whichever type of card you choose to use, make sure it’s one of the many EMV debit or credit cards on the market today—their pin-and-chip technology provides you with more security against fraudulent charges.