The Amazing Rate

Visa recently reported that Americans are spending more money on debit cards than on credit cards. In 2008, Visa announced that Visa debit card spending accounted for $206 billion, while Visa credit card spending accounted for a lesser $203 billion.

Consumers are trying to avoid greater credit card debt and the immediacy of debit cards allows them to do that. During this time of economic woe, it makes sense that Americans are making the switch to debit over credit. The similarity of debit and credit also accounts for the higher use of debit cards. Both plastic, you simply hand over the debit card as you would a credit card and you’re done, without having to pay back a balance later or incur interest. Because it’s your own money, you have no extra fees and therefore, no debt.

Credit cards, on the other hand, offer greater fraud protection. If a credit card is stolen, the most you are required to pay for an unauthorized transaction by law is $50. Though this protection is not offered with debit cards, the economic situation most Americans are finding themselves in is enough to overlook this small difference.

A credit card is a good thing to have; it’s convenient when traveling, when cash is hard to find, or when paying your bills. However, if you overspend, credit card debt accumulates, and it can be one of the hardest things to get rid of. If you want to avoid credit card debt, or are trying to erase existing debt, follow a few of these simple steps:

• Pay off your balance every month. This is the best way to avoid paying interest, which is the cause of most major credit card debt.

• Pay more than just the minimum balance due. Paying only the minimum balance keeps you from making any real dent in what you owe and ensures your card will never truly be paid off.

• Take out a loan or ask a family member to borrow some money in order to pay off excessive debt. Asking to borrow money is not always the desirable choice, but it will come a long way in eliminating much of your debt.

• Research debt settlement plans. Though settlement plans are sometimes costly, they can reduce your bills for a monthly fee, and get your cash flow back to normal.

In this tough economy, many people are suffering with debt. It may seem impossible at times to relieve the stress brought on by credit card companies, but with a little work, your credit card debt can be a thing of the past.

Although using credit cards may be convenient and easy, in the long run, they can ruin your finances. If you have a credit card, chances are you spend more. Because there is no emotional attachment to using a credit card (as opposed to using cash, which you can feel leaving your hands), you are likely to spend up to 18% more.

According to the American Bankers’ Association, the average family carries $8,000 in credit card debt. The safest way to avoid racking up this much debt is to not use credit cards. Though you may pay your bills on time, the credit card companies will always turn a profit.

If you’re still unsure about carrying cash, or want a convenient method of payment, use a debit card. Though paying with cash is the surest way to save money, using a debit card when traveling or short on cash can be just as convenient and easy as using a credit card.