How to select among Credit Card v/s Debit Card
In this technologically advanced era of the digital economy, the use of plastic money is being promoted by every govt so Credit Cared v/s Debit Card becomes a million-dollar question. As both these cards are the prime forces behind boosting the digital imprint of any nation in the digital sector and its economy. Both these cards have their advantages and disadvantages which can not be dictated by anybody except the customers like you and me who are using these cards.
For some credit card may be a beneficial while for one Debit card may be useful which depends on the purchasing power, modes of payment, etc. So I or for say no one can tell you which card is best for you but to make your choice simpler we can just compare both Credit cards v/s Debit cards :
A Debit card is issued by any bank or financial institution against a saving or current account on your name. So to have a Debit Card you must have a bank account with the issuing bank and as a card is directly linked to your account so the money will be debited directly and instantly from the account. Latest Debit cards issued by institutions have some features like credit cards and can be used as in place of credit cards at selected places and for selected purposes.
A credit card is another popular way to use plastic money and there is no necessity to have a bank account for credit card holding. But you have must have any backup tool against which credit card can be issued by a company like Fixed Deposit or regular payments being made to account as in case of salary. A credit card comes with a limit of credit amount in it which depends on the purchasing power, credit history, and many other factors of the customer.
Both cards avoid the utility of carrying hard cash in the pocket while going for shopping. As both these cards may have the same look in terms of the company logo, details on the card, etc but both differ from each other in terms of their functionality. Let’s tabulate the differences among both Credit cards v/s Debit cards to make it simple for you:
Diffrence of Credit card v/s Debit card :
|DEBIT CARD||CREDIT CARD|
|Linked to your Saving/Current bank account.||No need to have a Bank Account.|
|The amount spent on purchasing will directly be debited from your bank account.||Amount will taken on the credit from the issuer for period of time.|
|It can be used as a Credit card at selected laced and purposes.||It can also be used to withdraw cash but it is not recommended because of heavy charges.|
|No any hidden of other charges except joining fees that also in rare cases.||Credit Card has many charges like Joining fees, late payment fees, annual fees, and many more.|
|You can not spend more than the money you have in your account with exception of overdraft facility holder.||Credit card can not be used above the amount of credit limit of card.|
|Transactions through Debit cards have no impact on your credit history.||Credit card transactions impacts your credit history.|
|These are prone to online fraud.||Comaparatively less prone to online fraud.|
|Getting a Debit card is easy.||Approval for credit card is a length process.|
|There are very less or no rewards attached to online payment through it||Credit cards have lucrative rewards and cash back sytems for customer on online payments.|
|There is no interest in any facility of the Debit Card.||Credit card levy heavy interest for late payment, cash withdrwal and others.|
|The amount spent on purchasing will be debited from the bank account instantly.||Credit cards have billing period window of 30-45 days to pay the bills of cards later after purchase.|
|As account debited instantly so you will not be under debt.||Credit card operate under the debt by issing institutions so it is not debt free.|
|If bill of the the credit card is not paid within the billing period than heavy charges will be levied on the amount that may rose upto 24% sometimes.|
You can compare the advantage of both the cards and their disadvantages as well and can go for the card which suits your requirement in a better way. Then also here are some guidelines to provide you some insight about how to choose among these cards:
Cash Requirement: If you use to make payment frequently to vendors in hard cash than it is advisable to go for a Debit card and not for a Credit card because the Debit card has no interest over cash withdrawal as ATM while Credit card has.
Financial Discipline: If you are financially disciplined and have a habit of making bill payments timely than you should go for a Credit Card otherwise not. Because late payment of bills in case of a Credit card can attract large interest sometimes up to 36% of the bills or so. If you have a habit of skipping bill payments than the Debit card is best as money is debited from the account immediately and you can not spend more than the money in your account.
Type of Shopping: If you enjoy shopping in malls and outlets and not online shopping than you should go for a Debit card. But if you like and use to do online shopping more through e-commerce portals than you can choose credit card as credit card offers lucrative reward programs for online shoppers.
Shopaholic: If you are an Oniomaniac person or Shopaholic than you should choose a Debit card because it will not allow you to spend more than the money you have in your bank. This will save you from creating unnecessary debt in the future which may be there in case of using Credit cards.
Planning a Trip: If you are planning a trip then you must carry a credit card and it is highly recommended not to use Debit cards in the trip. Because on a long trip you are going to make different types of transactions which attract good reward points on your credit cards like booking of hotels, Dining, Marketing, Sporting, Overseas Spending, etc.
At the last, what matters most is that how you handle your finances or budget, because if you are financially educated than it is less significant for you to go for a Credit card v/s Debit card. Individuals having better control of their finances are using both the cards simultaneously while topping up their accounts with rewards and advantage of both cards by selecting the best card for the purpose.