- Hey guys, welcome to another episode
of The Rachel Cruze Show.
Okay, on here we talk a lot about not having credit cards
but having a debit card.
And there's a big difference between the two,
but some people are like, "Oh yeah, Rachel,
but if I just have a debit card, X, Y and Z,"
or "A debit card doesn't do X, Y and Z
that a credit card does."
So let's just break it down.
Let's compare the difference
between a debit card and a credit card.
All right, we'll go super basic first.
A debit card is attached to your bank account,
so when you swipe a debit card,
you're using your money.
It's coming out of your checking account, okay?
It's linked.
When you swipe a credit card
you basically are just using debt.
It's all it is.
So you're borrowing money from the bank for that purchase,
and then you pay the bank back whenever your bill is due.
So the difference is using your money
versus the bank's money.
Now your debit card will probably have a logo
like Visa or Mastercard in the corner.
So when you run your debit card
and you click the debit option,
you type in your pin.
Do, do, do. I almost said my pin out loud.
That would've been really bad.
You type in your pin, and then it's done.
So the transaction goes from the merchant
to your bank, and there it is.
Now, the thing is, if you run it as a credit,
you're not running it as-
You're running it as a credit card,
but it's not a credit card.
It is a debit card.
So when you run it as a credit,
what happens is you sign your name,
and what ends up happening is,
it goes from your merchant to the credit card company.
So again, Visa or Mastercard, they actually
they actually do the transaction of the purchase
and then it goes to your bank.
So if something happens in the middle of all of that
Visa or Mastercard, whatever logo's at the bottom
of your card, you have full protection of them.
So actually when I have my debit card
I always run it as a credit.
I rarely type in my pin number.
I usually run it as a credit, and you'll end up
signing your name when you do that option,
but it's the safest option,
so I love that.
Now, there are a lot of reasons
that people are still holding onto their credit cards
and they refuse to get them up.
But if you need to lose weight,
you don't keep a bunch of cookies and junk food in house,
do you? No.
You know I need to eat healthy,
so you're gonna have healthy food in the house.
Now, if you wanna do better with your money,
I would say get rid of the credit cards.
When you just don't even have the option to use them,
that's gonna help you.
It's the first big step.
So here are the most common perceived benefits
that I hear people use their credit card for,
but we'll talk about the real truth.
So one benefit is better fraud protection
if you use a credit card versus a debit card.
Well the truth is, again,
you get the exact same fraud protection.
You get the exact same level
of protection with your debit card
as you do on your credit card.
Visa even says this on their own website.
If your card is lost, stolen, or there's any kind of fraud,
you will get that money back.
Now, identity theft, it is on the rise,
and thieves are after more than just your money okay.
They're gonna be after your Social Security number,
medical files and tax statements.
All of these are so valuable
when someone wants to steal your identity.
And many times you won't even realize
that your information has been compromised
until it's too late.
Seriously, it's not a matter of if,
usually, it's a matter of when your identity is stolen,
which stinks that this is the life we're living in,
but it is true.
So be sure to protect yourself
with Zander ID Theft Solutions.
They provide proactive monitoring
and alerts, 24/7 customer service,
and, best of all, they're super affordable.
Starting at less than $7 a month.
If your identity is compromised,
they'll do all the legwork for you
to get everything back on track.
That is so worth it, you guys.
That's such a headache when that happens,
and to have a company just take care of it,
it's a dream.
So just go to zander.com and click ID Theft.
Okay.
The next perceived benefit that I hear
about credit card use is of course
the points and the cash back.
But the truth is, studies show
that you will spend more when you spend with a credit card.
So all the cash back you're getting,
you probably could have saved
or more without using that credit card.
And they're giving you all this cash back and rewards,
because guess what?
They are making so much money off
of people who are not paying their bills,
and they're paying all this interest.
So like all the "free" stuff that you're getting,
it's because other people are not doing it. Okay?
And then if you're not paying your bill off every month,
then you're paying interest that accumulates.
I mean, it's just, it's crazy.
So again, I'm not gonna play that game
with a credit card company.
No, I'll save my money,
I'll be in control of it.
And I'm not gonna take advantage of other people
not doing well with their money to get all the free stuff.
So I don't wanna play the game.
I'm out.
Now, the bonus is that some debit cards now
actually are gonna offer rewards.
Make sure to stay on budget,
but when it's a debit card,
and, mentally, you're in totally different mind space
versus a credit card.
All right, somebody will talk about the benefit
of having a credit card is
all the travel perks that you get.
But the truth is, trillions with a T,
not a B or an M, a T,
trillions of airline miles go unused every year.
Isn't that crazy?
Especially last year, when there was no travel going on.
So you went and charged up your credit card thinking,
"I'm gonna travel the world,"
and then it was like, nope. Pandemic.
You're staying home.
You're Like, "Oh, man."
Yeah, that's what happens.
Life happens.
So like I said before, credit card companies
are not just giving you everything for free.
They're doing it because they're making so much money
off of you in the long run.
All right, you guys,
hopefully I cleared up
some rumors and confusion
from the difference between credit cards and debit cards.
But again, just get rid of the credit card, okay.
Have a debit card,
and then learn to take control of your money
and create a life you love.