Credit vs Debt Cards

Debit cards are increasingly more popular than credit cards with American consumers, for several reasons.

First of all, using a debit card connected to a checking or savings account is more like �real money� to the consumer, who may be wary of racking up enormous credit card debt.

Unlike credit cards, debit transactions are withdrawn (usually) immediately from funds that the consumer actually possesses. It is estimated that debit transactions are now actually on a par with cash transactions, each with a third of all purchases. An extra perk to debit card usage is that there are generally no fees assessed for their usage, making them �just as good as cash� in the marketplace for savvy shoppers.

And of course, debit cards don�t have pesky interest rates or monthly bills. The downside to debit card use is that, unless you carefully maintain your checkbook or continuously maintain a large enough balance that you don�t have to, you may incur sizeable insufficient funds fees for overspending what your account holds. One way to avoid this is to link up your checking account to a savings account or specifically earmarked credit card for overdraft protection.

On the other end of the spectrum, however, there are some comparative downsides to debit usage. First, debit cards just don�t offer the incentives that credit cards do, including cash back, rebates, and discounts. More importantly, people who can afford to pay off their balances in full each month generally enjoy a �float� time of several weeks between when they make their purchases and when they are liable for paying them, even without penalty of interest. Debit transactions are withdrawn immediately, or almost immediately. For this same reason, credit cards offer greater protection against faulty merchandise or services, as you can opt to withhold payment until you are satisfied in some cases. Debit transactions pretty much ensure that a merchant will have your money in hand before you find some defect with their goods. The law actually holds the side of credit card users, who can expect zero-liability protection against fraud and defective goods and services, as well as access to their money while a transaction is in dispute, as spelled out in the Fair Credit Billing Act. Most debit card merchant policies offer similar protection, but these are only policy, and liable to change.

You can counteract debit card theft, but only if you take speedy action. Under the Electronic Fund Transfer Act, you can dispute unauthorized withdrawals from your account when you discover them, and covers you to some extent. If you catch a missing or stolen debit card within two days of its loss, you are only responsible for up to $50 of any unauthorized expenditures. If you don�t miss if for more than two days, you may be stuck paying up to $500. Wait 60 days, and your protection is nil � which means that you could easily drain your checking, savings, and overdraft reserves paying for some thief to take your card on a shopping spree.

Overall, the debit versus credit question is one with many aspects to consider. A good rule of thumb is to only use your debit card at reliable merchants you know and trust, where you can inspect purchases before taking ownership of them and enjoy the ease and convenience of making small purchases without fees or bills. Large expenditures and those made on the internet or phone may be safest put on a credit card, where your protection will be greater.

Common Mayth

Fact versus fiction: can you separate the truth from the hype?

Myth: You need stellar credit to obtain a credit card.
Reality: While an awesome credit score never hurt anyone in the market for a credit card, there are a number of options available to people with middling, so-so, or terrible credit, as well. Those looking to kick start credit as students or young adults may also be surprised at the options available to them. You may want to peruse this site for some offers that suit your needs. Alternatives like a prepaid debit card may also be a viable solution for those looking to prove they can handle the responsibility of a monthly payment.

Myth: Visa has the best merchant acceptance of all the major cards.
Reality: In America, Visa and MasterCard are actually pretty equal in terms of acceptance rate. In terms of overall worldwide acceptance, Discover is probably the leader, though American Express has the strongest foothold in Europe and Asia.

Myth: If a criminal steals my card, Im totally liable for all the charges.
Reality: The most that any credit card issuer will make you pay is the first $50 of liability, per law. In fact, most cards offer zero-liability fraud protection, leaving you entirely absolved of responsibility for your card being lost or stolen and used without your permission. Speed is of the essence in this case as long as you are dutifully quick in notifying your card issuer about the loss, you should have no worries.

Myth: A higher credit limit is always better.
Reality: First of all, it isnt even always that hard to get a higher limit. You can always call your card issuer and ask that your limit be raised, and some merchants may raise it without you even asking or being notified, for that matter! However, if you are in the market for a new house or car, having too much unused potential credit may be a burden you dont want potential lenders may look at this as an indication that you could spend up all those limits, and be left with a boatload of debt you potentially may not be able to pay. With or without a higher limit, you want to observe the golden rule of not spending up more than 50% of your available credit, so you arent perceived as a risk.

Myth: You should carry one each of a Visa, MasterCard, Discover, and American Express.
Reality: This old saw has no basis in reality, as each of the four major cards has a sizeable global acceptance rate.

Myth: You can close an account by cutting up the card.
Reality: Sorry, but this urban legend is just not true. You cant close out an account without letting your fingers do the waling, and getting in touch with the card issuer. The customer service phone number for that account should be right on the back of the card, and a representative should be able to take care of closing your account without too much hassle.

Myth: Closing an account will remove it from your credit report.
Reality: You would think so, but this isnt the case. Your credit tends to remember your accounts, even if you think youve written them out of your life. Voluntarily closed accounts shouldnt be of concern to you, even though they will appear on your credit report.

Cards I Actually Need

How Many Cards Do I Actually Need?

There is no right amount of credit cards; no magic number that places you squarely on the road to good credit and covers you in case of lifes many emergencies. Averages tell us the typical American has between 5 and 10 cards, with some individuals carrying many, many more.

Rather than focus on a number of cards, expects urge you to consider how much debt you can afford to pay off every month, and seek out the card or combination of cards that allows you to build the most solid credit history.

The balance you carry on your card(s) is also crucial the ideal is somewhere between 25% and 50% of your total credit line. Beyond that, creditors may perceive you as a risk for paying back their money, especially if something were to happen to you, such as a lost job. With high balances racked up, you lose your ability to be able to expediently pay the off if such a situation arises. If you need to make a purchase that exceeds 50% of one cards balance, it may be wise to split it between two accounts. This is an obvious benefit of having more than one card.

Of course, the fewer cards you have, the easier it will likely be for you to keep track of them when they are due, your current balances, the minimum payments, and so forth. It may mean that you are more likely to notice a discrepancy from what you are used to in looking at your bills, and be more likely to spot a billing error or instance of fraud. It may mean that you are more likely to keep up with the due dates, and pay your bills on time. If you need to update an address or phone number on all your bills, contacting multiple credit card companies may become a real hassle. And keeping track of the coming and going of actual cards when they expire and you are sent new ones a key opportunity for fraud may become more difficult when you have more of them to keep track of.

This does not, however, mean that you should go willy-nilly closing old accounts. Oftentimes, the accounts you have had the longest are the best building blocks of your credit, and the most telling reflection of many years spent diligently paying on time. Plus, closing too many cards may leave you with a worse debt-to-credit ratio it will seem like you are carrying a higher percentage of possible credit on the cards you leave open, even if the balance remains the same.

The age of your accounts is always a big factor in determining your credit, so screen your accounts carefully when you are considering closing them. A long and successful credit history can only behoove you, even with more than one account open. Make sure however, not to let accounts go inactive by not using them for more than six months this, too, can damage your credit score.

On the other hand, however, opening a couple of new accounts at any given time has its downsides, as well. You may find that, the more accounts you open, the less likely the card issuers are to give you high limits they may not want to run the risk of you maxing them all out and not being able to repay. You may find it most prudent to hold fewer accounts with higher maximums than to hold several with smaller limits. Not only will this be more useful to you in the case of a necessary big purchase, but you wont run the risk of having several accounts maxed out with small dollar amounts. Either way, an established history of paying at least the minimum on time on all your cards is a building block for good credit.

If you decide to go the route of holding multiple cards, it may be best to choose a combination of Visa, MasterCard, Discover, and American Express, which have the highest acceptance rates, as well as lower interest rates on the whole than department store or specialty cards. If you have more than one card that offers rewards or bonuses, you can always use the right card at the right time to get the maximum benefit from your purchases. You may save a low interest card for emergencies, and pay off your higher interest cards altogether each month, so that the actual rate doesnt matter.

Regardless of the actual number of cards you carry, it is crucial that they are the ones best suited to you and your needs. The entrepreneur may seek out a small-business credit card that benefits him or her much more than a regular consumer card.

Overall, in deciding how many cards you want or need, it is crucial to keep your debt-to-income ratio in mind. Some experts suggest the magic number for this ratio is 36% or below, taking into consideration other obligations like your rent or mortgage, car loan(s), and other debts. Personally, you never want to have more accounts open than you can manage at any one time, whether considering your payments, or the time it will take to sit down and sort them all out so they get paid enough and on time.

Low Interest Credit Card

	The following Low Interest Credit Cards feature either a low fixed rate APR or a low introductory APR. Apply for the credit card of your choice by filling out a secure online application.

Capital One® No Hassle MilesSM Rewards
	Click "APPLY HERE" to apply online or call 866-592-0808 1 mile per dollar spent on purchases up to $1,000 each month 2 miles per dollar above $1,000 each month No limit on the miles you can earn and miles don't expire 0% APR on purchases until September 2010 No annual fee
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0% on purchases* until September 2010* 13.90% (V)* None* Yes* Excellent Credit*

Discover® More Card - American Flag
	5% Cashback Bonus® in categories like travel, home improvement stores, department stores, gas, restaurants, pet stores and many more Up to 1% unlimited Cashback Bonus® on all other purchases 5% to 20% Cashback Bonus® through our exclusive online shopping site
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0%* 6 months on Purchases; 12 months on Balance Transfers* as low as 11.99%* None* Yes* Excellent Credit*

Capital One® No Hassle CashSM Rewards
	Click "APPLY HERE" to apply online or call 866-517-0808 2% cash back on purchases at gas stations and major grocery stores 1% cash back on all other purchases No limit on the cash you can earn and cash won't expire 0% intro APR on purchases until September 2010 No annual fee
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0% on purchases* until September 2010* 14.9% (V)* None* Yes* Excellent Credit*

Discover® More Card
	5% Cashback Bonus® in categories like travel, home improvement stores, department stores, gas, restaurants, pet stores and many more Up to 1% unlimited Cashback Bonus® on all other purchases 5% to 20% Cashback Bonus® through our exclusive online shopping site.
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0%* 6 months on Purchases & Balance Transfers* as low as 11.99%* None* Yes* Excellent Credit*

Citi® Platinum Select® MasterCard®
	0% APR* on balance transfers and purchases for 6 months No annual fee Citi® Identity Theft Solutions $0 Liability on unauthorized purchases Secure, free online account management Extra Cash from Citi: enjoy significant discounts on gift cards, travel, merchandise and more
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0%* 6 months as low as 11.99%* (V) $0* Yes* Excellent/Good Credit*

SlateSM from Chase
	Now with BlueprintSM 0% intro APR Patented Fraud Protection Zero Liability on Unauthorized Purchases E-mail and Text Alerts No Annual Fee
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0%* for up to 12 months* as low as 13.24%* $0* Yes* Excellent/Good Credit*

Capital One® No Hassle MilesSM Ultra - For Professionals
	Click "APPLY HERE" to apply online or call 866-547-0808 2 miles for every dollar spent on purchases No limit on the miles you can earn and miles don't expire No blackout dates and no seat restrictions Use miles for Travel, Merchandise, Gift Cards and more 0% APR on purchases until September 2010
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0% on purchases* until September 2010* 13.90% (V)* $39.00* Yes* Excellent Credit*

Miles by Discover® Card
	Double Miles on travel and restaurant purchases. One Mile for every dollar on all other purchases Flexible redemption options for travel, gift cards, or cash Double Miles through our exclusive online shopping site
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0%* 6 months on purchases & balance transfers* as low as 11.99%* None* Yes* Excellent Credit*

Citi ForwardSM Card
	The credit card that rewards you for good behavior Up to a 2% purchase APR reduction when you make a purchase, stay under your credit line and pay on time 3 billing periods in a row 6,000 bonus points after $250 in purchases are made within 3 months of account opening 5,000 bonus points when you sign up for paperless statements within 3 months of account opening 5 rewards points for every $1 you spend on dining, books, movies and music. 1 reward point for every $1 you spend on other purchases 0% APR for 6 months on purchases and balance transfers
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0%* 0% APR* for 6 months on purchases & balance transfers 14.24%* (V) None* Yes* Excellent/Good Credit*

	Low Interest Credit Cards for Students
	The following Low Interest Credit Cards for Students feature either a low fixed rate APR or a low introductory APR. Apply for the credit card of your choice by filling out a secure online application.

Citi® mtvUTM Platinum Select® Visa® Card for College Students
	0% APR* on Purchases and Balance Transfers for 6 months if you qualify based on your application and credit history* Earn 5 ThankYou Points® for every dollar you spend at restaurants, bookstores, record stores, movie theaters and video rentals stores. Earn 1 ThankYou Point for every dollar you spend on all other purchases. Earn 25 ThankYou Points every month when you pay on time and don't go over your credit limit. Earn up to 2000 ThankYou Points twice a year for having a good GPA. Redeem points for gift cards, travel, electronics, music and more. No Annual Fee
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 0% if you qualify* 6 months* as low as 17.24%* (V) $0* Yes* Good Credit*

Instant Approval Credit Cards

Instant approval is not guaranteed for the following products; however, an instant response will be provided within 60 seconds of completing an online credit card application. Don't wait for an answer, receive an instant credit card response today! Although issuers strive to provide an instant response whenever possible, more time may be needed in certain circumstances to determine if your application is approved. Please note that in order to receive an instant approval online, you must usually have good to excellent credit.

First PREMIER® Bank Gold Credit Card
	Low fixed APR Your account history reports monthly to the major Consumer Reporting Agencies Convenient account access by phone available 24/7 Use your card everywhere MasterCard®/Visa® cards are accepted (subject to available credit) See website for complete terms and conditions
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed N/A* N/A* See website* See website* N/A* Bad Credit*

AccountNow® Prepaid Visa® Card
	100% Guaranteed Approval* Free Credit Builder Free Bill Pay Free Direct Deposit $0 Activation Fee - when you load your card by direct deposit New iAdvanceSM loan option - no credit check No Overdraft Fees or Minimum Balance Required Re-loadable with a $10,000 balance limit
Intro APR Intro APR Period Regular APR Monthly Fee Balance Transfers Credit Needed N/A* N/A* N/A* $9.95* N/A* No Credit Check*

Starwood Preferred Guest® Credit Card
	Earn up to 25,000 Starpoints® — enough for up to 6 free nights at a category 1 or 2 hotel. No annual fee for the first year and $45 thereafter Express Approval. Get a decision in less than 60 seconds.
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed 2.90%* 6 months* 15.24%* No annual fee for the first year - $45 thereafter Yes* Excellent Credit*

American Express® Premier Rewards Gold Card
	Earn 15,000 Membership Rewards® bonus points when you spend $1,000 in your first 3 months of Card membership Earn Membership Rewards points up to three times as fast: You can earn 3X points on airfare, 2X points on gas and groceries, and 1X points on everything else Earn 15,000 Membership Rewards bonus points when you spend $30,000 per calendar year.
Intro APR Intro APR Period Regular APR Annual Fee Balance Transfers Credit Needed N/A* N/A* N/A* First Year Free, then $175 annual fee N/A* Excellent Credit*