Comparing Cards
Think fast: what’s the most recent financial decision you made? You likely won’t have to think too far back.
Comparing Cards
CASHIER: Your total comes to twenty two thirty eight.
JEN: Okay.
CASHIER: And how will you be paying for that today?
JEN: Um…
PREPAID: Well isn't it obvious?
DEBIT: Shh! She can make her own decision.
JEN: Who said that?
PREPAID: Hello!
JEN: Ack!
DEBIT: I can handle this purchase. Easy peasy. That's what debit cards do!
CREDIT: Do you remember how awesome my rewards program is, though? Swipe me. We got this.
PREPAID: I think what these two meant to say is that you want to use me, Prepaid Debit. I mean look at my logo. Just like a credit card. Cool, right?
CREDIT: Please. You're nothing like me. I'm the only one here who can help build credit. You have literally zero effect on a credit score.
PREPAID: But I don't need a whole special approval process. I'm accessible. Anyone can own me.
DEBIT: I'm pretty accessible, too and I tend to have less fees than you do, Prepaid Debit.
PREPAID: Oh, yeah? Name one.
DEBIT: Activation fee.
PREPAID: Sometimes.
CREDIT: Transaction fees.
PREPAID: Not always.
DEBIT: Reload fees.
PREPAID: Well.
CREDIT: Maintenance fees.
PREPAID: I said one! At least I don't have to worry about crazy interest rates or overdraft fees.
CREDIT: I do charge interest on balances, but that's the trade off for a generous credit limit! You're limited to the amount loaded onto you. And you're limited to how much is in your checking account.
DEBIT: Right, that's why people who hang out with you too much get into tons of debt!
PREPAID: And everyday it sounds like there's a headline about a new credit card data breach.
CREDIT: Don't give me that attitude. Debit and I are protected by federal law to minimize liability caused by that kind of stuff. If you get lost or stolen, your owner is out of luck, most of the time.
PREPAID: You're just jealous because everyone thinks I'm cool and you can't handle it!
CREDIT: How dare you challenge me, you good-for-nothing piece of plastic!
DEBIT: Don't checking and savings accounts mean anything to anybody anymore?
JEN: Guys! Guys. Let's be cool. Can you just try and say something nice about each other? Come on, I know you can do it.
DEBIT: Well, Credit does have cool rewards.
PREPAID: And if you're smart about it and don't carry a balance, she can be a pretty great.
CREDIT: And I guess Prepaid Debit can come in handy, like if you're traveling.
DEBIT: You can use it in lots of different places.
CREDIT: And if it gets lost or stolen, it can't be used to access your account.
PREPAID: And Debit, I totally admire your affordability.
CREDIT: And you can be used to take out cash from ATMs all over the world.
PREPAID: You kind of rock at managing money, I must say.
JEN: See? Was that so difficult?
CREDIT: I guess not. But getting back to your purchase. How are you going to pay?
DEBIT: Yeah Jen, who are you gonna choose?
PREPAID: Please. Please. Pease. Pick me. Pick me.
CREDIT: Who's it gonna be?
JEN: I'm just going to pay with cash this time.
CARDS: Noooo! Really! Are you kidding me?
BILL: Hee hee.
GRANDPA GIFT CARD: Hey guys, what about me?
JEN: Who are you?
GRANDPA GIFT CARD: I'm an old gift card with 12 cents left on it. I'll show myself out.
Comparing Cards
It's a Money Thing
Paper or Plastic?
Every time you make a purchase, you're choosing from a wide range of payment methods. Cash, debit or credit? Card A, B, or C? Even though each option represents a way to access basically the same thing (your money), it pays to be smart about when to use each payment type and understand the differences between them.
Think of it like an instant personal check.
Debit card transactions take money out of your checking account immediately, whether it's at the store or at the ATM.
Think of it like a convenient way to borrow money.
Credit card transactions (which you could be charged interest on) are covered by the card issuer or financial institution, and you then have to pay them back at a later date.
Think of it like cash, but in card form.
Prepaid debit cards are not linked to your checking account, nor do they allow you to borrow money.
How Should I Pay?
Are you eligible for a credit card?
(If you are 18 or under, or if you have problems with your credit, the answer is probably no)
Yes
Is your purchase in-store or online?
In-store
Online
Do you carry a balance on your credit card?
No, I pay my balance in full each month
Yes, credit cards make it so easy to spend money!
You don't want to end up paying tons of interest on regular purchases - stick to the basics until your credit card habits are under control
Are you visiting a foreign country?
No, I'm shopping local
Yes, I love traveling!
Is it a large purchase or an electronic purchase?
Yes, I'm getting a new tablet!
Some credit cards offer extended warranties on large purchases, which helps protect your big buys
No, I'm just picking up a couple of things
Is there a monthly limit on your debit transactions?
Yes, if I exceed it, I pay an extra fee
If your debit card transactions are limited, you can use your credit card to make multiple purchases; paying your credit card balance in full from your checking account will only use a single debit transaction
Does your credit card have a rewards program?
Yes
If you have good credit habits, it's worth taking advantage of the credit card rewards available to you
No/I have debit card rewards too
Then it comes down to preference and the features of your particular cards
Are you eligible for a credit card?
No
Is there a monthly limit on your debit transactions?
Yes, if I exceed it, I pay an extra fee
Paying in cash for small purchases can help reduce the amount of debit transactions you make in a month
No way - I can use my card as often as I want
Are you visiting a foreign country?
No, I'm shopping local
Yes, I love traveling!
Does the vendor accept cards?
Yes
I just noticed the "cash only" sign - oops!
Do you have any cash on you?
Yes
No
Time to locate an ATM - in most cases, it makes sense to use your debit card at the ATM, since there are higher fees associated with using a credit card for cash advance
Some travelers prefer using prepaid debit - that way, if your card is lost or stolen, it can't be used to access your account or ring up charges beyond the amount loaded onto the card
Credit, Debit, Cash, Prepaid Debit
What You Need To Know About Your Payment Cards
Are you able to answer these questions about your cards?
Debit:
What is the monthly fee for your checking account?
Can the monthly fee be waived with a minimum balance?
Is there a monthly transaction limit on your debit card?
Can you use other financial institutions' ATMs? Is there a fee for doing so?
Are there online banking tools available to you to help manage your checking account?
Credit:
What is the annual fee for your credit card?
What is the interest rate?
Is there a rewards or cash-back program associated with your credit card?
Does your credit card offer extended warranties on certain purchases?
How much are you charged for cash advances (ATM withdrawals using a credit card)?
Prepaid Debit:
How much does a prepaid card cost you? There may be a combination of different fees including monthly, activation, reloading, ATM, maintenance and transaction fees.
Is there a fee for checking the balance on your card?
Brought to you by CoVantage Credit Union
It's a Money Thing is a registered trademark of Currency Marketing