Читать книгу Investing All-in-One For Dummies - Eric Tyson - Страница 110

Whether it’s paying monthly bills or having something in your wallet to make purchases with at restaurants and retail stores, we all need the ability to conduct transactions and access our money. Credit cards aren’t a good idea for most people, because the credit feature enables you to spend money you don’t have and carry a debt balance month to month. Notwithstanding the lower short-term interest rates some cards charge to lure new customers, the reality is that borrowing on credit cards is expensive — usually, to the tune of more than 18 percent for most young adults.

Paying a credit card bill in full each month is the smart way to use such a card and avoid these high interest charges. But about half of all credit card holders use the high-interest-rate credit feature on their cards. And, even if you pay your bill in full each month, it’s worth considering whether charging purchases on your credit card encourages you to spend more.

Debit cards are useful transaction vehicles and a better alternative for folks who are prone to borrow via their credit cards. A debit card connects to your checking account, thus eliminating the need for you to carry around excess cash. Unlike a credit card, a debit card has no credit feature, so you can’t spend money you don’t have. (Some checking accounts offer prearranged lines of credit for overdrafts.) And as with a credit card, you can dispute debit card transactions if the product or service isn’t what the seller claimed it would be and fails to stand behind it.

During periods of relatively low interest rates like those of the last several years, the fees levied on a transaction account, like a checking account, should be of greater concern to you than the interest paid on account balances. After all, you shouldn’t be keeping lots of extra cash in a checking account; you’ve got better options for that, which are discussed in the rest of this chapter.

One reason why bank customers have gotten worse terms on their accounts is that they gravitate toward larger banks and their extensive ATM networks so they can easily get cash when they need it. These ATM networks (and the often-associated bank branches) are costly for banks to maintain. So you generally pay higher fees and get lower yields when you’re the customer of a bank with a large ATM network, especially a bank that does tons of advertising.

By using a debit card that carries a Visa or Mastercard logo, you won’t need to access and carry around much cash. Debit cards are widely accepted by merchants and are connected to your checking account. These cards can be used for purchases and for obtaining cash from your checking account.