At 4.95% (average floating rate at the time of writing this article) having this offset your mortgage would have saved you $16.50 for the month or $198 a year. Multiply that by 25 years (a typical mortgage term) and this process has only saved you $4,950. Don’t be fooled into thinking this process will help you pay off your mortgage faster as some lenders would have you believe. It will take a lot more than just what you can save in interest by using your credit card so get some additional advice from someone who knows what they are talking about and has helped others pay off their mortgage faster. Find out what other strategies and disciplines you will need if paying your mortgage off faster is your objective.
Benefits of a Debit Card: Again, just like a credit card I am sure there are more benefits but these are the ones I believe are the best so let’s talk about these.
- Convenience – it’s easy and just about everywhere you go you can use it.
Just like a credit card they can be used in most places you can use a credit card and for online purchases. You can also change through logging into your internet banking which account it accesses funds from before you complete the transaction so you have a greater ability to ensure your card is debiting funds from the right account if you are working to a budget/plan.
- Safety – It’s harder to get yourself further into debt
You can’t spend money ahead of having it. This means you won’t have a balance at a future date that you cannot pay and therefore removes the risk off interest payments absorbing your money, money you will no doubt have a better use for elsewhere and prefer to keep than give to a bank.
- Builds discipline – You can only access your money
Because a debit card only allows you to access your money (unless of course your bank has given you an overdraft too) then your spending is more disciplined. You need to think about your purchases especially online ones, you can only spend your money once so if you overspend and don’t leave enough funds for other payments due then you’re in trouble.
Whether it is a credit card or debit card you opt for take time to step back and ask yourself what is the purpose of the card? What do you need this card to do for you? Some would argue that a debit card cannot be used for a lot of the things that a credit card can but if you take time to ask you may find it does everything you need it to.
I trust this article helps you sit back and carefully consider the right choice for you. If you currently have a credit card with a debt you don’t enjoy, check out our online calculator, it may help you work out how much you need to be paying to get it paid off.
An interesting fact you may not know
Did you know that the first credit card was “Diners Club”? Prior to this it was common practice for stores and merchants to provide a card that would allow purchase of goods solely with that merchant. The idea behind these cards was to create loyalty with their customer by allowing them to obtain goods without the need to return if they didn’t have sufficient money with them at the time.
The original card produced had a requirement of payment in full at the end of each month therefore not attracting any cost to the user. It was approximately 9 years later they progressed to a card where you could then have a revolving limit and the introduction of interest and charge costs began.
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