Debit cards vs. credit cards. Which one is better for you? While everyone is familiar with credit cards, debit cards are a newer feature on the financial landscape. With a debit card, the money for your purchase is taken directly from your checking or savings account, at the time of purchase. Credit card purchases on the other hand, result in a charge being placed against your card and may require you to pay an interest charge on your purchase.

Lets take a look at the advantages and disadvantages of both these handy plastic cards:
(See below for more information.)

• Quick access to cash from your bank account
  
  
• It is easy to get a debit card so long as you have a bank account
  
  
• No interest charges
  
  
• No annual fees or high financing charges
  
  
• Allows for controlled responsible spending. You must have the money in your bank account to spend it
  
  
• Ease of use, nowadays most places of business accept debit card transactions - although a few will not allow
  debit card purchases on extremely low priced purchases
  
  
• Reduces the amount of cash you need to carry

Disadvantages of debit cards include:

• You must have the money in your account to use a debit card.
  
  
• Organization of transactions is difficult. With every debit transaction that you make you may or may not get a receipt.
  
  
• Expensive service charges per transaction may be charged if you use your debit card at a certain vendors or bank machines. Also, depending on the type of bank account you have set up - you may be paying a service charge for every debit card transaction you make.
  
  
• Lack of security if your debit card is lost or stolen - and your pin number is known to the person who takes the card. It is NOT a good idea to record your pin number and carry it in your wallet. Also, be careful to ensure that someone standing behind you cannot read your pin number as you enter it.
  
  
• Does not help you establish a credit rating

Advantages of credit cards include:

• If used wisely, can help establish your credit rating (FICO score).
  
  
• Convenience factor - by now and pay later
  
  
• Act as a piece of identification
  
  
• Can save you money - many credit card companies now offer incentive and bonus programs
  
  
• Security - If your credit cards are paid off then you have potentially thousands of dollars available in times of emergency
  
  
• Independence - credit cards provide a sense of independence

Disadvantages of credit cards include:

• It is easy to get into severe credit card debt
  
  
• You might be changed high financing charges such as annual fees
  
  
• You might be paying high interest charges
  
  
• If you carry an outstanding balance you will always have a feeling of having to owe money for an item that you may have purchased months earlier

There are positives and negatives to both debit and credit cards. Depending on your financial situation you may find that all you need is a debit card. However if you are looking to create a positive credit rating and improved FICO score, then a credit card (used wisely) might be the way to go. Many people choose to use both credit and debit cards, depending on the purchase and their situation.

Which ever way you decide to go - it is important to keep your over all financial picture in mind and to make the best decisions you can. Before you decided whether you will use your debit or your credit card start by asking: 'Do I really need this item - or do I simply want it?'.