Credit Cards, meet Mr. Scissors.

Okay, now, as some of you know, some credit cards come with added features that make them more attractive to their holders. I know a lot about this--I currently work for one of the largest credit-card banks in the USA and I have the benefits of their cards memorized. For example, holders of the card I sell have a ninety-day purchase guarantee, so that if they accidently break their item, or if it arrives in the mail damaged, or if it's stolen, they can get the full amount of money back from their credit card company, free of charge. Some credit cards have no annual fee. Some have a 25-day grace period in which you can pay off your balance in full to avoid any interest. Some have lost-luggage insurance, so if you buy your travel tickets with your credit card and the airline or bus line or train loses your luggage, you get up to $3000 from your credit card bank, free. Free as long as you always pay your balance off before you start accruing interest.

However, this wasn't a review of credit cards, it was a review of debit cards. Debit cards carry no interest whatsoever. As a matter of fact, you gain interest on the money in your account while it sits in there. Interest is what pays for the extras on the credit cards you hold. Your credit card bank can afford to offer you these deals because some poor person out there is shelling out the 14.99% or more interest on his or her minimum payment every month because he got himself into debt by buying that new deluxe Bose stereo system he really couldn't afford, or because he used his credit card to pay for a medical bill that he couldn't cover and he's now struggling to make the payments on his card. That's right--these services aren't free, folks.

There are a few problems to watch out for. As I mentioned before, watch out for transaction fees or other expenses that using your card may incur (although I do think that it will still be less than what a credit card racks up). Also, many larger banks have an overdraft allowance that lets you go over the amount of money in your checking account. So, if you use the debit card for a $50 and you only have $30, the bank covers the missing $20. However, and this is the catch, they might charge you a fee. One bank I know of charged a $25 fee for every single debit card overdraft, even if it was for as little as ten cents. If you're poor enough that you're constantly overdrawing your account, this could be a serious problem. However, my bank won't allow me to use my card for any more than I have in my checking account. This might be embarrassing when I go to pay for something using my card and it's declined, but it sure beats having to pay a huge overdraft fee.

So, while I think a debit card is a good idea for everyone (say no to financing!) I do think it's perfect for people with a low/moderate income who are trying hard not to live outside their means. It gives you the freedom of having a credit card without piling up all the debt and interest that having plastic normally brings. Maybe it doesn't come with the perks that a platinum credit card has, but if more and more of us use our debit cards and cut up our credit cards, banks will wise up and start providing.