Should I Use A Debit Card or A Credit Card?

Using a credit card to make an online purchase

Should I use a Debit Card or a Credit Card?

Most of us carry at least two pieces of plastic to pay for things – a debit card and a credit card. But what’s the difference between the two?

To begin with, think of it this way: With a credit card, you’re borrowing someone else’s money to make a purchase, but you’ll have to pay it back. With a debit card you’re pulling money directly from your own bank account. It’s the difference between taking out a short-term loan or spending only what you have.

So which one is better?

Let’s just say, ‘it depends.’

Debit Cards

Using a debit card is like writing a check. You’re spending money from your account for goods or services. If you don’t have enough money in your account, the debit will be turned down. If you do, money is deducted from your account almost in real time. Debit cards can also be used at ATMs or to get cash back at places like grocery stores. These cards can be great to help keep you from spending more money than you actually have and they can be great for in-store purchases.

Learn more about your Cornerstone Bank debit card and it’s features by visiting the Debit Card Page.

Debit Card Tip: Carrying a debit card is safer than carrying cash. If you need cash you can always use your debit card at an ATM to make a withdrawal.

Credit Cards

Credit cards can be perfect for large purchases because you’re borrowing someone else’s money for a short period of time. They also come with some liability protections and benefits that most debit cards don’t have. These benefits might range from cash back, to points for airline miles or lodging. Benefits can also include extended warranties or rental car insurance. Because of these protections, using a credit card for rentals or online purchases can be safer than using a debit card.

While both card types offer ways to dispute a purchase, your credit card issuer is trying to get its money back from a merchant. With a debit card dispute the money that came from your account is gone and unavailable for use until the dispute is resolved.

That doesn’t mean credit cards don’t come with drawbacks. If you have trouble controlling your spending or paying your account bill on time, it can be costly. That’s because interest is charged on bills that aren’t paid in full by the end of each billing period. You could also face a late fee. The longer you take to pay off the bill, the more you’ll pay in interest charges.

It’s also quite possible that credit cards that offer rewards will charge you an annual fee, whereas debit cards often come free with an account at your financial institution.

Learn more about our Cornerstone Bank Credit Cards and find the right fit for you by visiting our Credit Cards Page. Or to apply click here. 

Credit Card Tip: When used responsibly, credit cards are a great tool to help you build your credit score.

So which one should you use?

While credit cards generally come with more protections, you’ll want to make sure you pay them off as fast a possible to avoid paying interest charges. Responsible use of a credit card can also help build your credit score.

Debit cards, on the other hand, can be great for in-store purchases and are good for people who want to limit spending to only what is in their account.

Either way, experts recommend that you always monitor your accounts online and to report any discrepancies immediately. You should report a lost or stolen card immediately.

No matter what card you use, be sure to take the time to read about your protections and rights as a cardholder.

To find the right product and learn more about the different types of cards visit with a banker today! 

Paying Debts and Learning to Save

Couple opening Savings Account

Paying Debits and Learning to Save Money Can Reduce Your Financial Worries.

‘Don’t worry, be happy’ is great advice, but it isn’t easy to follow when it comes to experiencing financial issues. Many of us worry about money – how much we owe, why we can’t save enough – and that doesn’t make us happy. High on the list of financial concerns for many people are bills that need to be paid – especially credit card debt, loans and health-care costs. By paying debts and learning how to save many people can find relief from financial stress.

“If you have a lot of debt, it makes it harder to save money for emergencies, long-terms goals, and vacations,” says Morgan Anderson, Personal Banker.

Paying Debts

The more money you owe the deeper the hole feels, and interest costs can add up quickly if you are only making minimum payments. To make it worse, missing payments can hurt your credit rating, making it more difficult to get a loan in the future.

Morgan says the key is to pay off those bills as soon as you can. She also suggests making more than the minimum payments whenever possible and paying off loans or credit card balances with the highest interest rates first.

“By only making the minimum payment each month, you will end up paying more in interest charges over time,” explains Morgan. “And the higher the interest rate is, the more it will inevitably cost you.”

Learning to Save Money

The wise move here is to work on paying off your debts first, then start saving. Building an emergency fund is important because that money can be used instead of having to borrow money for unexpected expenses such as replacing a broken refrigerator or medical expenses. When it comes to your health, Morgan also recommends having health insurance to help offset the high costs of care.

Take the time to figure out how to balance your income and your expenses. As well as prioritizing your needs and wants. Many people find it’s easier to automate monthly fixed expenses and savings deposits. That’s because you can set up automatic payments at your financial institution to pay those expenses. After that if you have leftover money, you can automatically direct it into savings accounts. Be sure to also take advantage of employer matches for retirement funds; it’s essentially free money and can make a big difference over time.

Then, once you find the balance between paying debts and saving for the future, you’ll worry less and smile more.

Visit with one of our expert bankers today!

Common Financial Mistakes – And Tips to Avoid Them

Paying with credit card at coffee shop

Are you making some common financial mistakes? What you do with your money can get you into a financial mess, but it can also get you out.

Face it, we buy things – and that can mean trouble if we spend too much and don’t leave enough to save or pay bills each month.

Your spending makes a difference.

Taking out a loan for a new SUV or a bigger house can mean bigger payments and higher interest costs each month.

Think about it: The difference between a top-model vehicle and the entry-price model can cost you hundreds of dollars more in payments each month. The same goes for the amount of interest you’ll pay over the life of the loan. That’s money you could be using to pay off credit card debt or add to your savings.

Even the seemingly ‘little things’ can add up. Expenses like a gym membership, a new smartphone, or dinner out on a regular basis can add up.

Expert Tip: Cutting your spending by only $50 a week will save you $2,600 year – enough to pay down loans or even sink into an emergency savings account to help you cover unexpected expenses down the road.

What’s The Secret to Avoiding Common Financial Mistakes?

The key to staying ahead of spending problems, follow a budget. Knowing how much you owe and what your income is will give you a good picture of your monthly finances.

Expert Tip: Assess your needs and cut back wherever possible.

The concept is simple, spend less than you make. Then with the extra money, you can come up with a plan to put the rest into savings or invest for the future.

It can feel overwhelming. Maybe you aren’t sure where to start. Getting help from a financial professional is a great place to start. They will be able to take a fresh look at things for you.

Beware and don’t let your savings or having a little extra money in your checking account at the end of the month tempt you.

Expert tip: Set up an automatic transfer from every paycheck to go into a savings or separate account. If it’s automatic you won’t see it! Start small with $5 and grow from there.

Ready to get started? Meet with a banker today!

Home Equity Line of Credit

A home equity line of credit (HELOC) has many benefits for you and all of your financial needs.

What is a Home Equity Line of Credit (HELOC)?

A HELOC, is based off the value of your home and is a second mortgage that gives you access to cash to help you pay for things such as home improvement projects, unexpected expenses, or that dream vacation, just to name a few. You can draw from this line of credit and repay all or some of it monthly. It works similar to a credit card but is secured by a mortgage on your home.

How does a Home Equity Line of Credit Work?

This type of loan allows you to borrow against your home’s equity, pay it back, and repeat. Most HELOCs have a variable interest rate. This means that as the baseline interest rates go up or down, the interest rate on your HELOC will go up or down. Your banker will set your starting interest rate by using an interest rate index. Then add a markup depending on your credit score and loan-to-value ratio. Generally the higher your credit score, the lower the markup. Before signing off on the HELOC, you should review all the documents and the margin with your banker to make sure you fully understand the terms.

Contact a banker today to get started!