Tip 7: Use a debit card, not a credit card!

A credit card has been a necessity in recent years; there have been situations where you just had to have one. However that is really no longer the case. Nowadays you can use a debit card in most situations where you previously have needed a credit card. There are actually quite a few reasons that you would want to use a debit card rather than a credit card. In most cases it makes much more sense financially.

The reason that you would want to use a debit card instead of a credit card is that it will keep you out of debt. This offers a number of advantages; by far the biggest is the amount of interest that you will save. Credit cards are notorious for their extremely high rates of interest. If you run up a balance on your card and don't pay it off in full every month you are costing yourself a lot of money. In most cases the amount of interest you pay will exceed the initial cost of your purchase by several times. Obviously this is not a good situation. With a debit card there is no interest so this is money that you don't have to spend.

The other big reason that you want to avoid going into debt is that it is so easy to get into trouble. A lot of people get into trouble with their credit cards because they can run up debt so easily. The result is that they end up spending more than they can afford. Once you have done this it is very unlikely that you are going to be able to get out of debt without major expense and completely destroying your credit.

A debit card also makes it a lot easier to stick to your budget. When you have a credit card you can spend up to whatever amount the credit card company has decided that your limit is. Unfortunately this amount in no reflects what you can really afford. With a debit card you can only spend money that you actually have. This forces you to stick to a budget. By no means is this fool proof, you obviously don't want to spend all of your money but it is better than being able to run up a debt.

One of the major flaws of a credit card is that in most cases the debt that you run up is going to be bad debt. That is you are borrowing money to make purchases that you really shouldn't be borrowing money to make. In large part this is day to day expenses and consumables. In general you should only be borrowing money to buy things that will increase in value. Rarely is this the case with credit card purchases. Using a debit card will help you to avoid this problem.