Students: Credit Vs Debit

Every student across the nation heading off to college is presented with the same financial problems. Subsidized student loans, unsubsidized student loans, grants, financial aid, student credit cards, and debit cards are just some of the terms that students are presented with when they prepare financially for college. Sorting through this mess can be a complicated and headache-inducing matter, but this article will help to sort through one of the most pressing problems for potential students: whether to go debit or credit.

There is one big difference between debit and credit: debit purchases remove money that is available in your checking account while credit card purchases are taken out of an allotted credit balance which must be repaid at a later date. Knowing these two things, each has their own advantages and disadvantages.

Debit, to start with, has the advantage of not needing to worry about having to pay back money. When you go debit, you are using money you already have to pay for items. You don't have to worry about grace periods, due dates, and heavy interest and late penalties that are common with using credit cards. In addition, especially recently, more banks are offering rewards with debit card usage, something which has been common with most credit cards for years.

On the flip side, the disadvantages of a debit card is that you are limited in two ways: 1. You have only a certain amount that can be withdrawn using that debit card each day and 2. You only have the money in your checking account to use for purchases, going over this amount will lead to heavy overdraft fees. Also, the rewards mentioned above are still quite pale in comparison to those offered by many credit card companies.