For Those in Need of a Credit Score Boost
Your credit record doesn’t reflect debit card transactions.  But using your credit card responsibly, paying your bills on time and keeping your debt at or below 30% of your credit limit can help boost your credit score.  If you're worried about sticking to a budget, Gail Cunningham of the National Foundation of Credit Counselors suggests keeping your existing credit card accounts active by charging a small amount to them each month for fixed expenses, like cable or car insurance. By linking those cards to a checking account which automatically pays off the balance in full each month, you’re practicing good credit card behavior and eliminating the risk of impulse purchases and overspending.
Best Bet: Credit

For the Fee-Phobic
Debit cards are notorious for leading to fees. First, there are those wretched ATM charges.  But beyond that there are overdraft fees. Banks typically allow you to make a debit transaction even if you don’t have enough money in your account. Why? It’s a huge money maker for them.  For each overdraft on your debit card, expect a fee of around $35. Between bounced check fees and overdraft fees, banks make some $10 billion annually. Credit card companies cash in on fees too. Beware of $35 and up late payment fees, which can be easy to accrue when your credit card company moves your payment due date without much notice. There are also equally pricy over-limit fees. It’s particularly easy for cardholders to exceed their credit limit when they’re being assessed 20 and 30% interest. So even if you haven’t actually charged more money than you’ve been allotted, if you’re carrying a balance, and interest begins to compound, you might exceed that limit in no time. Then you’re being charged interest on your fees, too, and it really gets out of control.
Best Bet: Draw

 

 

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