When it comes to carrying cards, there are typically two types of people—those who rely solely on credit cards and those who stick to their debit cards. Credit card carriers may believe that credit is safer than debit, while some debit card users grew up hearing cautionary tales about overspending with credit cards.

What is the difference between debit and credit? Is there really a right choice on which to use? If you are considering a debit card or credit card in Illinois, Flanagan State Bank is here to help. This article will break down the differences between credit and debit and help you choose the best card for your spending.

Debit Cards: Are they right for you?

What is a debit card?

Debit cards give you direct access to your checking account without needing an ATM. You can pay for groceries, get cash back, and shop online with your debit card. Since you can only spend money physically in your account, debit cards provide the convenience of a credit card without the risk of accumulating debt.

How much does it cost to use a debit card?

Access to a debit card is typically free of cost, but the checking account associated with your card might charge fees or have minimum requirements. If you are worried about paying ATM fees, consider a Kasasa Cash debit card from Flanagan State Bank. With a Kasasa Cash or a Kasasa Cash Back debit card, your domestic ATM fees are reimbursed up to $20 monthly.

How do I use a debit card responsibly?

While you can’t rack up thousands of dollars of debt with a debit card, you can overspend and blow your monthly budget. Although it may be easy to swipe your debit card at the store, don’t forget about other bills you need to pay from your checking account this month. Overspending with your debit card can quickly drain your bank account.

Prioritize the security of your debit card. While many debit cards now offer fraud protection, it may take some time to return stolen funds to your account. You also have a limited window of time to report some types of fraudulent charges. Losing your debit card gives a thief instant access to your checking account.

What kind of rewards can I get from a debit card?

You don’t need a credit card to get rewarded for paying with your card. Your Kasasa Cash Back checking account gives you 1.6 percent back on your purchases when you pay with debit. In order to receive cash back rewards on your Kasasa debit card, complete these simple 3 tasks each month:

• Make 12 debit card purchases
• Enroll in e-statement notices
• Log in to online banking

What are the disadvantages of having a debit card?

Debit cards are useful, but your purchasing power is limited. When paying with debit, you must have enough money in your checking account to cover your purchase. Unlike a credit card, you don’t have a month to pay the bill. You may need to delay large purchases if paying with debit.

If your debit card is lost or stolen, money can be taken directly from your checking account without your consent. You may be able to dispute these charges, but your bank account could remain empty until the theft is resolved. In this case, you would have to rely on a savings account to pay your bills in the short term.

What are the advantages of having a debit card?

Debit cards provide a real-time analysis of your spending, allowing you to keep a close eye on your monthly budget. The risk of overspending is reduced with debit card use, and you avoid debt accumulation and high interest rates. A debit card is a convenient tool that allows you to make the necessary purchases while avoiding the temptation to spend more than what’s available in your bank account.

Credit Cards: Are they right for you?

What is a credit card?

A credit card differs from a debit card in that the money you spend with a credit card does not come directly from your checking account. When you swipe a credit card, you borrow money to make your purchase. You have until the end of your billing cycle, typically a month, to pay the credit card company. If you do not pay your credit card balance in full, interest will be charged on your balance. A credit card is a short-term loan that accrues interest after a month.

How much does it cost to use a credit card?

Unless your credit card charges an annual fee, credit cards are free to use. The moment you start carrying a balance on your credit card, however, is when your credit card starts costing you money. The average interest rate charged by credit card companies in 2023 was 22.8 percent. According to the Consumer Financial Protection Bureau, major credit card companies charged over $105 billion in interest in 2022. To avoid accruing debt and racking up interest, you need to follow responsible credit card practices.

How do I use a credit card responsibly?

Responsible credit card use starts by choosing the right card for your needs. Annual fees, interest rates, and rewards vary from card to card. Choose a card with no annual fee, a comparatively low interest rate, and rewards that fit your lifestyle.

Once you have your card, there are 3 important things to do if you want to be a responsible credit card user.

• Make your credit card payment on time. Late payments will damage your credit score.
• Pay off your credit card in full each month. If you are spending more than you can afford, a credit card may not be the right tool for you.
• Keep your credit card secure. Although credit cards come with fraud protection, disputing charges on a lost or stolen credit card takes time.

What kind of rewards can I get from a credit card?

Credit cards have partnered with various businesses to reward customers for choosing their cards. Rewards can be redeemed for airline tickets, hotel stays, gift cards, merchandise, and statement credits. At Flanagan State Bank, we proudly offer uChoose Rewards for our credit card holders. With uChoose Rewards, you earn one point for every dollar spent. Credit card points can be redeemed for travel, gift cards, brand-name merchandise, and more.

What are the disadvantages of having a credit card?

The main disadvantage of using a credit card is the tendency for users to overspend. Once you start accruing credit card debt it grows quickly. Carrying credit card debt can lower your credit score and make it difficult to apply for other financial products like car loans and home mortgages.

What are the advantages of having a credit card?

When used responsibly, credit cards can improve your overall financial health. Building your credit history while making on time payments improves your credit score. A higher credit score can make you eligible for other banking products and lower interest rates.

Credit cards are also more forgiving of fraudulent charges than debit cards. The Fair Credit Billing Act allows users to dispute unauthorized spending and purchases that are damaged or lost during shipping.

Many credit cards add protection to your purchases in the form of extended warranties or insurance. This benefit can help you get more from your purchases when you place them on your credit card.

Discover how both Debit and Credit can work for you

When comparing debit cards and credit cards, you’ll find that they have many similarities combined with a few qualities that make them unique. For most consumers in Illinois, both debit and credit deserve a place in your wallet. Get started with a rewards debit card when you open a Kasasa Cash checking account with no minimum balance and no monthly service fee.

For larger purchases, apply for a credit card. Offering a low interest rate and uChoose Rewards, Flanagan State Bank has the best credit card for your needs.

Wondering the best way to make debit cards and credit cards work for you? Reach out to one of our helpful associates or stop by one of our convenient Illinois locations in Flanagan, El Paso, Benson, Bloomington, Le Roy, Gridley, and Pontiac or Belgrade, Montana.