Debit or credit? Knowing the benefits of each card can help you manage money better.When Morgan Robinson began working for SmithKline as a teenager in 1999, she opened a checking account with her employer's bank. She was issued a Visa debit   The old Visa and Delta logos. card that could be used as a check card and for withdrawals at ATMs. But a little more than a year after opening her checking account, Robinson, 21, applied for and received a Visa card with a $1,000 credit limit, and a MasterCard with a $500 limit. Now that Robinson is graduating, which card is best to help her steer clear of debt? CREDIT CARD OR DEBIT CARD debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. ? Steve Rhode, president and cofounder co·found tr.v. co·found·ed, co·found·ing, co·founds To establish or found in concert with another or others. co·found of www.Myvesta.org, a consumer education organization, says debit, cards should be used to pay for day-to-day items. Credit cards are generally used for larger purchases, such as electronics, because they have more safeguards. With a debit card, payment for a purchase is withdrawn directly from a checking account. And debit card purchases are more likely to receive store credit, instead of a refund, for damaged items. Credit card users can make purchases without actually having the funds to cover the transaction in their checking account. GETTING THE MOST FROM YOUR CARD Russell Simmons Russell Simmons (born October 4 ,1957 in Queens, New York), is an American entrepreneur, the co-founder, with Rick Rubin, of the pioneering hip-hop label Def Jam, founder of another label, Russell Simmons Music Group, and creator of the clothing fashion line Phat Farm. , founder of Rush Communications Rush Communications is the company owned by hip-hop pioneer Russell Simmons. He is also the founder. Rush Communications is one of the largest African American owned media firms in the United States. , has teamed up with the Unifund Corp. to establish the Rush Card--a prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. Visa debit card (www.rushcard.com). Simmons says the card is intended for individuals who don't have access to savings or checking accounts. "It protects you from the kind of problems that you [encounter] when yon write a check for one dollar more than you have," says Simmons. Rhode cautions that debit cards, which have only been in use for nine years, haven't built the same credit worthiness in the industry as credit cards because transactions sometimes take longer to post, and some merchants don't always check for sufficient funds. PROTECTION FOR STOLEN CARDS Under the Fair Credit Billing Act The Fair Credit Billing Act (FCBA) is a United States federal law enacted as an amendment to the Truth in Lending Act (codified at et seq.). Its purpose is to protect consumers from unfair billing practices and to provide a mechanism for addressing billing errors in "open end" , if a credit card is immediately reported lost or stolen, the consumer is not responsible for unauthorized purchases. Credit card holders are also protected if items are detective, damaged, or don't arrive from online merchants. Those safeguards don't apply to debit cards. You are held liable for $50 if you report, a stolen debit card within two days. Your liability increases to $500 if the card is reported within 60 days. After that, consumers are responsible for all money lost, in addition to overdraft fees. |
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