By Michelle Dear, Co-Founder of Tandem
I would never use a debit card…and most Americans disagree with me.
Here’s what are they missing and why it’s important:
In a Federal Reserve poll, when asked how Americans would typically make a $10 purchase at a local store, respondents overwhelmingly preferred traditional payment options. More than 37% said they would use a debit card, followed by cash (36.8%) and a credit card (24.3%).
Why is this?
- The number one reason is that people feel anxious or overwhelmed when they use credit cards... they associate them with out-of-control debt (they don’t trust themselves‼️)
- With the right card and good financial habits (paying your balance off on time and in full each month), you can earn $2,000 or more in rewards over five years (and that’s after the annual fee) while increasing security, protection, and building credit!. Hello...they are literally giving away money...
- The best credit cards offer rewards on dining and travel, high rewards rates, lounge access and much more. With my Delta Amex card I earn a BOGO flight ticket (~$500) every year! Many of these cards also provide additional perks, such as discounts at select retailers, travel insurance, annual statement credits (for example, I receive car rental loss and damage insurance for free just by spending with my credit card!)
- Regarding fraud protection... it’s not even close. If somebody gets a hold of your debit card info and uses it fraudulently, they are stealing real money out of a real account. With a credit card, by federal law I am only liable for a maximum of $50 in charges if someone steals my card
- Next: Building credit...this is important. Unlike a debit card, a credit card can help you build credit. Better credit scores = better approval rates, lower interest rates, better terms, and more robust rewards. The aforementioned can translate to THOUSANDS of dollars in savings. It’s important to build credit early and consistently. Keep credit card utilization low and pay off your balances each month and on time
People say nothing in life is free...if you trust yourself, practice self discipline, and pay off your balance in full each month, THIS IS.