How to Take Full Advantage of Your Debit Card

We know many of you are having to make hard choices.

Amid this period of record high inflation, many aren’t thinking of summer vacations any longer. Your dilemma may be between paying rent or putting dinner on the table for your family. Some of you are prioritizing food and gas over prescription medicine. Taking care of your health is no longer a priority, so it is taking a back seat to your immediate needs. 

Even if you are employed and able to afford the basics, we know more and more of you are living paycheck to paycheck, without backup savings.

Even in these times of record inflation, we want you to know there are ways to stay afloat and build your financial security. These strategies will help you get on solid footing during tough financial times and will also help you when the economy bounces back.

Credit Cards vs. Debit Cards: What’s the Difference

Credit cards and debit cards are a necessary part of your financial life. 

Credit card vs. debit card is a common question we get. What’s the difference? We’ll break it down for you, explaining the pros and cons of each.

Here are some reasons why you should own a debit card: 

• Debit cards keep you in line by ensuring that you only spend money that you have in your account. This way, you can’t get into costly debt as you can with credit cards.
• There’s no monthly payment, no late fees, no compounding interest, and no credit card score penalty for missing a payment.
• Research has shown that when using a debit card instead of a credit card, you’re likely to spend less because a debit card feels more like cash, so you’re less likely to make extraneous charges.

Here are some cons of using a debit card.

• Fees for spending more than you have can add up.
• While some debit cards do have perks, they are still far fewer than those offered by traditional credit cards.
• Certain businesses, such as hotels and gas stations, can put a hold on your debit card temporarily, making it difficult to spend your own money even if you have money in the account. 

There are perks to using a credit card if you use it wisely and pay off the amount due at the end of each cycle. Some key benefits are:

• Credit cards have reward programs for merchandise, gift cards, airfare and cash back.
• Owning a credit card, and paying it off in a timely manner, will improve your credit score. The higher your credit score, the better your loan rate will be when applying for a car or home loan. Some landlords also check credit scores before renting apartments.
• A credit card will typically allow you to return a purchase or service that you are dissatisfied with or that doesn’t meet appropriate standards. 

There could also be some credit card drawbacks:

• If you don’t pay your balance in full, you could be charged interest up to 29 percent or more.
• If you don’t pay your bill on time, you will incur late fees and you’ll be charged interest on the balance and a late fee. You’ll also take a hit on your credit score. 
• Research shows that when people purchase items with a credit card, it doesn’t feel like they are spending real money, so they overspend. 

Charter Oak Debit Cards

Here at Charter Oak, we are focused on offering members financial literacy to help them navigate these times. Discover how to take full advantage of the benefits your Charter Oak debit card offers. 

A debit card will hugely help you on your financial journey. Some of the best debit card benefits include that they are interest earning, there is high security on the card, and it allows the consumer to control spending.

What makes Charter Oak’s debit cards different than others out there? We have many perks to share with you. 

First off, you’ll be hard pressed to find an interest rate of 3% APY*, but that is what we offer our Go Checking account members who receive an instant issue Charter Oak Visa® Debit Card. 

You’ll love the ease of keeping your account safe with Charter Oak’s Two-Way Text Alerts Fraud Monitoring. It’s as easy as sending a text. With our interactive fraud alerts, if our system detects suspicious activity on your card, you will receive a text message to your cell phone with details about the suspected transaction. All you have to do is respond to the text with a “yes” or “no” to confirm or deny the transaction. You may also receive a call from our Fraud Detection company, trying to contact you to verify if the attempted transaction is legitimate.

A Charter Oak debit card should also be in your arsenal of tools for financial success because it helps control your spending. According to financial guru Dave Ramsey, spending money is behavior based. When you feel money leaving your hand, you don’t spend as much, he says.

And when you’re struggling financially in a difficult financial economy as we are in now, spending less is a good thing. 

GO Checking disclosure and rate information:*(APY = Annual Percentage Yield) The GO Checking Account is a “Split Rate Tiered” account. You will earn the stated APY only for the account balance within each tier. 3.00% APY is paid on balances up to $10,000. Balances over $10,000 earn 0.25% APY. The “Default APY Rate” of 0.05% will be applied to all tiered balances if account conditions are not met. This account will also rebate all Charter Oak foreign ATM fees and ATM surcharge fees by other financial institutions or networks up to $9.99 each to a maximum of $20 per month and rebated monthly if certain conditions are met. Account Conditions: To earn the stated APYs and rebate of ATM fees, you must have e-Statement, Online Banking, 10 Debit Card transactions posted per month (excluding ATM transactions) and have either Direct Deposit of $750 posted in each calendar month or have 4 unique “Bill Pays” cleared in each calendar month except for the month the account is opened. If you fail to meet these requirements your account will earn the “Default APY Rate” of 0.05% on all tiered balances and ATM fees will not be rebated. This account is a variable rate account and rates can change at any time. APY effective November 1, 2020. This offer can be withdrawn at any time. Limit of one GO Checking Account per qualified member number.

Benefits to Take Advantage Of

As you sort out your financial situation, realize there are free budgeting tools to try. While there are also paid versions, a free version is a great place to start to get your financial house in order. According to CNBC, here are the best free budgeting tools for 2022. 

Also, look into joining a credit union, if you aren’t already a member of one. Loan rates are typically lower as are fees, and saving rates tend to be higher. At Charter Oak, we return our profits to our members through lower loan rates, lower fees, and better savings rates. When you join, you’re part of a member-owned institution that can meet all your financial needs, from banking to investments and so much more.

Make sure your pride isn’t getting the best of you. Many people, when faced with financial hardship are reluctant to turn to the government for help. However, there are programs that can help you out while you are getting back on solid financial ground. 

According to Due.Com, the government site www.Benefits.Gov. will help you figure out if you’re eligible for food, housing, healthcare, and childcare assistance. Due.com states that some of these programs include Unemployment Insurance; the Supplemental Nutrition Assistance Program; housing assistance through the U.S. Department of Housing and Urban Development; Temporary Assistance for Needy Families; and the Low Income Home Energy Assistance Program. 

Additionally, credit counseling services are available either free or at a low price through credit unions, extension offices, religious organizations, and non-profit agencies, according to Due.Com.  

Building Financial Security

When you are having difficulty stretching that paycheck, instead of burying your head in the sand and pulling out that credit card, getting deeper and deeper in debt, you need to face the situation. The best way to stay on top of your financial situation is to create a budget, either online or on paper, which details all the money coming in and all the money going out. 

Seeing the numbers will make it easier to figure out where to cut. For example, you may be spending $200 a month on food delivery, but you may have no idea that this service adds up to $200 monthly. Many budget items add up fast, and sometimes looking at your monthly numbers is the only way to see where the money is actually going and how quickly it adds up.

During tough financial times, food delivery and other non-essentials is an easy place to cut. Yes, it might be inconvenient to make your own meals, but this is one way to free up a chunk of money to put toward important bills – like housing payments, food and utility bills, and gasoline. 

You should also scan your budget for other extraneous items, such as multiple streaming service subscriptions. Stick to only one, or better yet, watch free videos online or listen to free podcasts.

Go over your budget, again and again, to find ways to trim the non-essentials. Once your budget is balanced, use leftover money for an emergency fund, which every American should have, no matter where they are on their financial journey. A good rule of thumb is to have at least 3 to 6 months of living expenses in your emergency fund. If you have such a fund, you won’t be living paycheck to paycheck and won’t be one step away from poverty. 

If you’ve trimmed all the fat from your budget, and still can’t balance it, you may need to raise your income, either by looking for promotions or more income opportunities at your current job or looking elsewhere for a higher-paying full-time job. Or you can add on a part-time job, such as food delivery, tutoring, or reselling of clothing and other items. Here are more ways to make extra money, from NerdWallet.