Debit cards which are issued by your bank in partnership with MasterCard or Visa are often totally misunderstood. In fact, a lot of people think that it’s the best way to pay for purchases so that they won’t be adding to their credit card debt.
Sure the logic appears okay on the surface.
However, if you pay for purchases with your debit card, you are missing out on leveraging free money.
When you pay for a purchase with your debit card, the money for the purchase is deducted directly from your bank account (or brokerage account if it’s a brokerage debit card).
By using your debit card, you are missing out on leveraging the power of the float.
In other words, you are not getting a free loan of 25 to 30 days (depending on your credit card float) as you would with a bank credit card.
See the point?
So in essence, when making purchases, it is best to use your bank credit card so that you can use the bank’s money first instead of your money.
Given that, should you then cancel any debit cards that you may have?
Nope, there is a right time to use your debit card.
First of all, it’s good to have a debit card in case of an emergency wherein you will need cash.
Using a bank credit card for cash advances should be avoided at all costs since …
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