What is Debit Card and a Credit Card?
The use of debit and credit cards is a convenient way to pay for goods and services without having to carry cash or checks. The difference between the two is where the money for the purchase comes from.
When you use the debit card, the funds for your purchase will be deducted almost immediately from your checking account. When you use a credit card, the amount will be charged to your credit line. This means you will pay the bill at a later date, which will give you more time to pay.
Deciding when it is best to use each card can often be complicated. For everyday purchases, consider using your debit card, as soon as you see the money being withdrawn from your checking account. For larger items, such as a rental car or hotel room. you can use your credit card to save money when you need to.
Although debit cards are widely used, many are unaware of their advantages and disadvantages. Debit cards are similar to credit cards but work like cash or personal checks.
Debit cards can work in two ways:
1. Like an ATM card to withdraw money immediately.
2. Like a check when you buy an item. The money used to pay for the transaction will usually be deducted from your account within one or two days when the retailer presents the transaction for payment.
Advantages of a Debit Card.
1. Easy to get: Most companies will give you a debit card upon request once you open an account.
2. Convenience: Purchases can be made by contactless or by card or by swiping the card instead of filling out a paper check.
3. Security: You do not have to carry cash or a checkbook in your hand.
4. Easily Acceptable: Debit cards are generally accepted outside the city (or outside the country) (be sure to tell your financial institution that you are leaving your city to avoid service interruptions).
Disadvantages of a Debit Card.
1. No grace period: The debit card uses the funds directly from your checking account. A credit card allows you to borrow money on credit with disposable money left in your account.
2. Check Book Balancing: It may be difficult to balance your account if not every debit card transaction is recorded.
3. Potential Fraud: Most financial institutions try to protect their customers from debit card fraud. However, a customer may be liable for a portion of fraudulent debit card transactions. Be sure to check with your financial institution for details.
4. Fees: It may be costly to use your debit card for ATM transactions if the ATM is not affiliated with your institution.
A credit card is a convenient financial product that can be used for everyday purchases such as groceries and other goods and services. It’s also a great source of buying great ticket items such as TVs, travel packages, and jewelry, as you may not always have the funds for these items. So credit card is very useful.
Advantages of a Credit Card.
1. Convenience: A credit card is easier to hide and carry than cash, and it’s much easier to keep tabs on a card than the exact amount you have. Also, with a credit card, you do not have to worry about running out of money for big-ticket purchases.
2. Reward: Many credit cards offer rewards in the form of cashback, airline miles, hotel points, or gas rebates. These rewards can subsidize the purchase price and be traded for unique facilities. Some reward cards offer discounts and other access.
3. Pay over time: Credit cards give you the ability to purchase now and pay later. Additionally, many credit cards offer 0% introductory APRs. Using such a card for a large purchase can save you a lot of interest as long as you pay off your balance before the standard rate comes into effect.
4. Balance transfers: Using a 0% balance transfer credit card can significantly reduce the cost of what you owe and help you get out of debt faster. It does not have to be credit card debt. Some credit card companies allow you to transfer balances from different types of loans.
Disadvantages of a Credit Card.
1. Excess cost and debt: When people use a credit card, they often spend more money than they already have. This is especially true if the payments do not appear, they do not actually feel, and we do not have to deal with the bill for weeks.
2. High-interest rates: Credit card APRs are high-interest rates compared to others you may find.
3. Fraudulent things: You are guaranteed a $ 0 liability for any unauthorized transactions using your account. But arguing the charges is a challenge. Fraud can also cause temporary damage to your credit report if it causes you to lose your payments.
4. Short-term credit hit: Each time you open a new credit card account, your credit status can take a short-term hit, lasting several months.