I wanted to open up a conversation about credit in general. I used the title above because I hope that this post will eventually morph into a sort of "best practices" that's been crowd-sourced.
When I think of things I wish I knew when I first started making money & gaining access to credit, I often come back to credit cards vs. debit cards. I find that a lot of people seem to prefer debit cards over credit cards or assume that debit cards are somehow inherently better. I always found this strange. They don't really offer many benefits, in my opinion. For one, debit cards aren't really given much legal protection in the event of fraud. Credit cards have a maximum liability of $50 and, in many cases, card issuers absorb all the liability. On top of that, debit cards are tied directly to your bank account(s), so fraudulent transactions immediately hit your account and could potentially cause overdrafts.
The other piece that I find interesting, and doesn't always seem to clear to people I speak with, is that credit cards are an excellent way to build credit, if you use them correctly. A lot of people seem to fail to realize that a credit card bill does not accrue interest (i.e. you don't owe anything above principal), if you pay your bill off monthly. Effectively, if you're using your credit like you would a debit card (and keep spending habits below what you're able to pay off via your bank account), then you're literally getting an interest free loan AND building your credit at the same time. All of that's even before you get into a discussion of all the perks/rewards you can earn on a good credit card.
Anyways, share your own thoughts & suggestions below. We'll probably visit this in a blog post sometime in the future, so make sure to subscribe & we'll see you around!
*not financial advice