THE DOWNFALL OF CREDIT CARDS | HOW TO PREPARE
According to new findings from Business Insider, there could be a new potential alternative to credit cards – here are my thoughts, enjoy! Add me on Instagram: GPStephan
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Business Insider just published an article, citing that consumers have been abandoning their credit cards, and pushing $100 Billion dollars worth of spending on…wait for it…DEBIT CARDS.
That’s right…Visa found that their credit card usage DECLINED by 21%…while debit card usage INCREASED by 12% year over year. And the first time in almost EVER…debit cards have begun offering rewards, similar to that of a credit card.
However, even though a debit card offering ANY amount of money back is rather remarkable, I do want to say this:
There are still so many DISADVANTAGES of using a debit card instead of a Credit Card…and it’s for these reasons that I almost NEVER recommend them for anyone to use on a regular basis:
One, Credit Cards are so much better for security – HANDS DOWN. Even though Debit cards are getting BETTER, they still have a long way to go…anytime you use a debit card, you’re basically giving the entire world direct line to your ACTUAL money sitting in your account – and, in the event of an error or an overcharge, getting your money BACK on short notice can be difficult since the money is taken directly from your account.
The SECOND reason I never use a debit card is because it doesn’t have the PURCHASE PROTECTION BENEFITS like a Credit Card has. See, many credit cards will offer this as a perk of using their service…and this should be reason enough for you to start charging everything on your credit card.
The THIRD reason I don’t use debit cards is because the rewards the offers just PALE in comparison to that of a credit card. Like, none of the debit cards listed offer a sign up bonus…and with a credit card, just sign up, meet the minimum spend, get a whole bunch of points…and use that for free travel, hotels, or cash back…all for using this instead of a debit card.
And finally…the last reason to use a credit card Is to boost your credit score and credit utilization. In the United States, your credit score is a huge factor in determining whether or not you can get a loan to buy a house, car, or any other purchase you want to finance…it also determines what interest rate you pay, and whether or not you get a low interest rate, or a high interest rate.
So I’d like to think ALL of those reasons I just mentioned are fairly compelling just to use a credit card for EVERYTHING, and to ditch the debit card and cash altogether. HOWEVER…there is FINE PRINT to this, where sometimes it’s BETTER not to use a credit card….and these are my thoughts:
You should NOT use credit cards to rack up debt IF you don’t have the money to pay it off, in full, when it’s due. You should never pay a single penny in interest, you should never increase your spending just because the money isn’t immediately taken out of your account, and you should have the cash available to pay it off, in full, at all times. Basically, just treat your credit card like it has a direct line to your bank account – if you can’t pay it off immediately or have the money on hand to pay for something, then don’t do it.
The REASON credit card companies offer such good rewards is because MOST PEOPLE DON’T DO THIS…and it’s PROFITABLE for the credit card companies to pay a small portion of their users really good rewards, just to lure everyone else in who will never use them, or pay a lot of interest. This IS an opportunity for you to make money off credit card companies…but, you also have to acknowledge that most people WON’T use it correctly…and that’s how companies can keep these rewards going in the first place. Be smart!
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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