Debit is the New Credit

When I worked the cash register back in my barista days, nothing inspired me and my co-workers to roll our eyes like the sight of a checkbook.

While credit cards could be swiped and wads of cash handed off in the blink of an eye, check-writing customers slowed down the line. They had to pull out their own pen, double-check the amount, and write it all out (in old-school cursive, nonetheless!). Sometimes they’d even record the transaction in their little book before tearing off the check. Then we’d have to run it through a machine to make sure it wouldn’t bounce.

Looking back, it probably wasn’t that much of a hassle. But my fellow baristas and I would giggle over how old-fashioned it all was. I mean, we understood when grandmas pulled out their checkbooks—they were old; they didn’t know any better!—but someone our own age? Come on, didn’t they know everybody used plastic? Credit cards were the only form of money we knew at the time. We could buy virtually anything with them (on top of our already huge student loan debts), whether or not our incomes afforded it. We just paid the monthly minimum, and it was all good. Or so we thought.

Funny how quickly things change. Today, most of my friends are cutting out their cards—or cutting them up. They banished them from their wallets into their underwear drawers or freezers, for emergency use only. You see, everything that we loved about credit was exactly what got us into trouble. Those checkbook customers had it right. They never spent a dime more than they had in their account, and they kept scrupulous records of every purchase. While I haven’t become a checkbook convert (I do have one nowadays, but since I pay most of my bills online, I don’t use it much) I have found a more modern equivalent—the debit card.

Debit has all of the benefits of a checkbook, but none of the hassle. It’s as easy as credit to use, but without the danger. And it seems to be catching on nationwide. Debit purchases this year are expected to surpass credit purchases at Visa—the No. 1 credit card company. In fact, debit in general is growing about 10% faster than credit, according to the Nilson Report.

Here’s what I like so much about debit:

- You can swipe a debit card like a credit card—but the money is directly taken out of your account, so you can’t overspend

-Your bank sends you a monthly debit statement, so you don’t have to slow down the line to record each purchase (or, in the case of cash, fail to keep a record). Your bank takes the notes for you!

-Having a statement helps keep you organized. In fact, keeping a record of what you buy—known as a spending journal—is one of the first steps to creating a budget. By actually being forced to confront your spending, you notice the places where money slips through the cracks (example: you’ve been paying $15 for Netflix every month—but the same unwatched DVD has been gathering dust on your shelf since March!)

-Sometimes debit even literally pays off. For instance, Bank of America offers a program that rolls over your “change” from each purchase into a savings account, then matches it. So if your lunch cost $5.25, that extra 75 cents gets saved—and the bank gives you 75 cents more.

This isn’t to say debit is the solution to every financial misstep. Ultimately, money choices come down to the mindset of the spender, not just the spending method. Sure, debit is safer than credit in many ways. But it’s still just one letter away from what you could wind up with if you overdo it: debt. If you can’t afford to pay the bills because you are spending too much, switching to debit is just one baby step. To get out of debt, you need a full financial makeover. That’s why DebtStoppers is here. Find out about our free debt analysis today.

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