Jewish World Review May 5, 2000 / 30 Nissan, 5760
Credit cards vs. debit cards
DEAR BRUCE: Can you explain the difference between a debit card and a credit card? Is there a difference? My best friend says that they are the same. We are both 19 and have just started very good jobs and are applying for credit. My brother says there is big difference, but I never know if he is putting me on or not. I would like to have the correct information. -- L.W. (e-mail)
DEAR L.W.: In this instance your brother is not putting you on. He is right on point. There is a major difference between a debit card and a credit card.
A credit card allows you to purchase things with the credit card's money. After a period of usually 28 days, they will bill you, and if you pay them in full by the end of that billing cycle, there is no charge to you for borrowing their money. If you only pay the minimum, or neglect to pay them, then, of course, the interest charges begin.
A debit card is quite different. A debit card electronically extracts the money from your bank account the moment that you make the charge. Some people say that it's like writing a check, but that isn't quite true. When you write a check, you have a little bit of a "float" in the time difference between when you write the check and when it reaches your bank. In the case of the debit card, there is absolutely no "float."
Some folks use a debit card because they know that they have a propensity for running up bills they can't pay. They are to be congratulated for recognizing their weakness. In the absence of that, I see no material benefit of a debit card over a credit card.
DEAR BRUCE: My cousin has an idea for a novelty gadget that seems like it could be sold successfully. He called a company that was advertising help for people like himself. They wrote back and applauded his invention and said they would be very happy to help. The preliminary fee would be $650.
He is all excited and wants to borrow the money from me since he is broke. But before I loan him the money, I'm going to have to think this thing out, and I thought that I would ask you. -- C.N., Toledo, Ohio
DEAR C.N.: Keep your hand in your pocket. The kind of company that your cousin wrote to is very long on promises and very short on delivery. They will take anyone's invention as long as they have money -- and the $650 is only the beginning. It is extremely difficult to get an invention to market, and it is a very costly process. From an untested inventor that money must come from his pocket and the pockets of those who love him. By all means, discourage him from using this
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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