Debit Card Benefits You Didn't Know Existed
Gone are the days of counting the exact change for that gelato you just bought. Debit and credit cards have changed the way we spend money. When you swipe, tap, or insert your card, you may not think twice about whether you are using a debit vs. a credit card. Money is money, right? Wrong!
There are differences between your debit and credit cards that you should know about. Your trusty debit card has some major benefits that you should take advantage of.
Credit card companies market to you with promises of rewards, miles, or points, often outshining the debit card, which can have more sensible benefits. Let’s break down the benefits of a debit card that you probably didn’t know about.
How Does A Debit Card Work?
A debit card allows you to make secure payments, drawing from your checking account rather than a line of credit. The money on your debit card is the money in your account. Pretty simple.
Advantages of a Debit Card
Now that you understand how it all works, let’s get into the good stuff: why is it better?
Avoid Hidden Fees
A credit card comes with annual fees, interest rates, late payment charges, and we are just getting started.
One of the biggest cons of using a credit card is the interest charges. Credit card companies have a reputation for charging high-interest rates that can fluctuate.
The interest rates and fees a credit company charges are used to calculate your APR (also known as an annual percentage rate). Usually, the more benefits your card promises, the higher your APR, and the higher your APR, the more you will pay for your balance.
Unlike credit cards, debit cards only have fees when you overdraw from your account balance, which you can easily avoid with some basic budgeting skills.
At Extra, we like to be completely transparent. We charge a monthly fee of $7. That’s it.
Spend What You Have
While it may seem nice to open a credit card account and pay for your purchases later, borrowing money can be a dangerous game. When you buy your groceries or sunglasses on a credit card, you actually don’t have to pay for them until the end of the month.
While this may feel amazing at the moment, it can lead to some major consequences if you don’t have the means to pay off your spending. If you can’t pay off your balance or you forget to make a payment, this can impact your credit score and make it easy to fall into credit card debt (we are looking at you shopaholics!)
Debit cards hold you accountable to pay with the money you actually have. Since you are spending the money you have in real-time, debit cards make it much easier to stay on budget. Debit cards show spending almost instantaneously, which helps you manage your money more efficiently. All you have to worry about is staying on budget.
No Application Necessary
Debit cards are an excellent option for those who are just starting out their credit journey, like someone with no credit or a poor credit score (it happens to the best of us).
When you apply for a credit card, you have to jump through some hoops before you can even get the card. This includes making hard inquiry which can negatively affect your credit score. A hard inquiry happens every single time you apply for credit (including a credit card).
Most debit cards fall short when it comes to rewards and building credit. Luckily, Extra came in and changed the game for debit cards.
Debit Card Rewards
Most debit cards don’t have options for building up any debit card points, miles, or rewards when you make purchases. Extra took this concept and turned it on its head.
Extra allows you to earn up to 1% in reward points every time you swipe. You can redeem your debit card points on the Extra mobile app for amazing rewards.
Build Your Credit With a Debit Card
We know it sounds crazy, but you can build your credit by using an Extra debit card. Here’s how:
You swipe away, buying whatever your heart desires. We spot you for the purchase and pay ourselves back the next business day. Then, at the end of the month, we total up all of your transactions and report them to credit bureaus as credit-worthy payments. Mindblown.
We don’t want to brag, but Extra is one of the best debit cards out there, giving you the pros of both a debit and a credit card. If you are eager to learn more, check out how extra works.
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