Ken King column: Comparing debit cards to credit cards

Posted by administrator | 25/03/12 | Tagged Credit Card Debt

Ken King column: Comparing debit cards to credit cards
News from The Sheboygan Press:

Last week I talked about the recent hype over Suze Orman’s new debit card. I need to follow up on the advantages and disadvantages to both credit and debit cards.

The biggest advantage of using a debit card is that you are not creating any debt. If the money isn’t there, you can’t spend it. Using a credit card is in essence a loan, thus creating debt. The solution is to pay off the credit card in full every month and avoid paying any fees.

There are five major reason a credit card is a better purchasing tool than a debit card:

» You build a credit history and credit score. Responsible use of credit cards is one of the most effective ways to build a good credit record and credit score. We will all need additional credit some day to buy a car or a house and a good credit history and credit score reflect our ability to pay on time. On the other hand, debit cards are simply a substitute for paying by cash and have zero impact on your credit score, mostly because the accounts and transactions are not reported to any of the credit bureaus.

» You get fraud and purchase protection. Credit cards provide fraud protection and limit your personal liability to $ 50. In addition you can dispute any charges on your statement for transactions you didn’t make or if the product is unsatisfactory or the service was not performed as agreed upon.

For examp…………… continues on The Sheboygan Press

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Is College Tuition the Next Bubble?
News from ABC News:

At $ 1 trillion dollars, student loan debt has eclipsed credit card debt for the first time in American history. To make matters worse, come July 1 the interest rate on federally subsidized Stafford student loans will automatically double, from 3.4 percent to 6.8 percent, unless Congressional action is taken to extend the lower rate before then. Depending on which side of the aisle you choose, extending the lower rate will cost between $ 3 billion and $ 7 billion per year (estimates from the center of the aisle hover around $ 5.5 billion).

The problem is not simply the interest rate. Loans for college are often taken out directly by parents, or guaranteed by them, and the debt can easily run into six figures. This could ultimately threaten their credit ratings, retirement funds, and even their homes. All of this boils down to a simple truth that just about anyone who is either actively paying for college or contemplating it already knows. When it comes to financing higher education in the United States, we’ve got a major problem. But if you’re like me, intuition isn’t enough. So allow me to paint you a thoroughly di…………… continues on ABC News

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Use a credit card comparison site to pick the right rewards card
News from Los Angeles Times:

Dear Liz: Should we get a rewards card? We have excellent credit scores. I’m a stay-at-home mom and my husband has a good, steady job. We spend about $ 6,000 a month with our debit card or automatic drafts from our checking account. I think our family should have a rewards card. My husband disagrees and says that for the amount we spend each month, we wouldn’t rack up any points. Is he right? If we should get a card, how do we pick the right one?

Answer: If you’re positive you’ll pay your credit card bill in full every month, you would be great candidates for a rewards card.

Right now, you’re passing up at least $ 720 in rewards annually. That assumes you’d be getting a card that rebates 1% of your purchases. With excellent credit scores, you could qualify for even richer rewards cards, since those are reserved for people with the best credit.

The simplest rewards cards are the cash-back cards, which rebate a portion of the purchases you make. Card comparison site NerdWallet recently named the Chase Freedom card as the best cash-back card with no annual fee. The card gives you a $ 200 sign-up bonus if you spend $ 500 in the first three months. All your purchases earn 1%, and you can earn a 5% rebate on certain categories of spending that change every three months.

NerdWallet also recommends…………… continues on Los Angeles Times

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Related News:

Margate vice mayor hands over controversial credit card
News from Sun-Sentinel:

March 24, 2012|By Lisa J. Huriash, Staff Writer

The Margate vice mayor accused of using his city credit card for personal use handed it in to city officials last week.

Vice Mayor David McLean, in office since 2004, was accused by a city activist and political blogger of misusing his credit card from April 2008 to July 2011.

In those years, McLean totaled $ 1,598.63 in personal charges, all of which were repaid. McLean said he gave up his personal credit cards in 2008 because they were at their limits.

Outraged, city commissioners agreed to make it a firing offense. On Wednesday night, they approved the language of an ordinance that will eventually make it city law.

Under the proposed ordinance, using the card for personal use is “grounds for forfeiture of office.” Officials said there would be a process — possibly a hearing or an investigation of the charges — before a commissioner could lose his job.

…………… continues on Sun-Sentinel
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