Credit Cards Vs. Debit Cards
Instead of cash, most of us rely on small pieces of plastic these days in order to pay for the items and services that we need on a day-to-day basis. Available in a wide variety of colors and patterns (and even in digital wallet versions!), plastic cards have all but replaced the checkbooks that were normal to see just a few decades ago. However, while you may have a variety of cards that physically look similar to each other, debit cards and credit cards could not be more different in terms of how they work.
The Difference Between Debit and Credit Cards
Debit cards draw money from your bank account which means that the second you swipe, you are agreeing to have the funds taken immediately out of your bank account – even if they don’t actually come out right that second. In other words, you’re using your own money to pay. In contrast, credit cards allow you to instead borrow money that you are then responsible for paying back. And this concept is popular – according to a 2020 state of credit report by Experian, the average American has three credit cards.
Using credit cards responsibly can help you build credit over time. However, “responsibly” is the key word here as credit cards can also lead to financial trouble and mean paying substantially more than you would have had you paid outright initially. Because you are using money that isn’t part of the set funds in your bank account with credit cards, it can be more tempting to spend money that you simply don’t have. According to the U.S. Federal Reserve, the value of credit card payments exceeded the value of debit card payments by almost 30 percent in 2018, for example, despite the fact that debit cards were used almost twice as much.
Bankruptcy Can Offer a Way Out of Credit Card Debt
Credit cards can be convenient and are sometimes necessary to rely on, but they can also get out of hand quickly and become a mountain of debt you feel like you are trapped under. Between high interest rates and excessive fees, it can seem nearly impossible to pay it off. If you are currently overwhelmed with credit card debt, it might be time to start over. Many borrowers find financial relief and get a fresh start with a bankruptcy. In addition to putting an immediate end to any harassing calls and letters from creditors, bankruptcy can also eliminate your credit card debt altogether or restructure it into payments you can manage much better.
Offering Experienced and Compassionate Legal Help
Bankruptcy is often the best solution for borrowers who have found themselves dealing with credit card debt that is out of control. However, every situation is different and it is therefore important to seek guidance in regard to your specific case. As the Plantation bankruptcy attorneys at Nowack & Olson, PLLC, we understand how stressful credit card debt and other debt can be, and we will work diligently to help you receive the full extent of the protection that bankruptcy can offer. Our knowledgeable legal team can begin providing you with the competent legal advice you can trust as soon as you contact us for a free consultation.