Decode the dissimilarities between credit and debit cards

If you are in a dilemma deciding whether to choose a credit or a debit card, first, you must know that both have different functions. Your utilisation purpose and financial capacity should be the two critical elements to consider ahead of making this decision. Apart from these major factors, you might have other considerations too.

Using cash everywhere and in every situation might not always be possible. For convenience and amplified benefits, you might have to go for other options like credit and debit cards. However, they have their pros and cons to offer to you.

The below representation will help you understand the basic perspective of utility that these cards provide you.

When having a debit card is blissful? If you want to have easy access to money you earn without carrying cash, this card can be a suitable option. Make sure that you have adequate money available in the account to cover the upcoming necessities.

When having a credit card is blissful? You do not need to deposit money in your account to use this card to sponsor some pricey expenses. Besides, this can be a better option to pay small bills and prevent you from getting loans for the unemployed when you are jobless but at feasible rates.

They might surprise you with similar features which are also a reality. Nevertheless, you can figure out the best option by acknowledging the key points where they differ.

How do you choose between a credit and a debit card?

The debate between owing anyone or both or none of them is inevitable once your outgoings grow with time. With different types of expenses emerging at different points in time, you might feel like having anyone or both. With a debit card, you may rest assured of having a free hand to use it for any form of everyday expenses.

On the flip side, considering a credit card for everyday purposes is entirely a wrong decision. Here, you will not be using your own money. Rather, you will take out a form of debt that will cost you interest fees.

You can take a tour of some of the underlying points that differentiate the two forms of cards.

Source of money

Both these cards provide you with speedy access to money in the virtual form. Whenever you need to, you just have to swipe them on a particular machine. You do not even need a wallet any more as they are very light to carry.

However, the source of money in both cases is not the same. You can find out why right here.

• Credit cards – Here, the card provider will transfer money into your account. You will be privileged to use it by paying some fees plus the amount. It might seem that getting them is easier than going through the typical borrowing process. Nevertheless, with very low scores, you have almost zero chances of getting a nod of approval from the card issuer unlike getting very bad credit loans with no guarantor claim from a direct lender.
• Debit cards – The meaning of having them is to take out money from your bank account. When you rely on them, you can easily avoid debt as they cannot afford high-end purchases. Besides, they make monitoring the balance of your bank account easy as you will receive a notification after each purchase. Above all, you cannot spend more beyond the amount available in your checking account.

Perks of having a debit or a credit card

One of the concerning aspects for every user should be the different ways they can make the most out of these cards. An overview of the advantages can be an eye-opener for someone who is confused between the choices.

Benefits of a debit card

• No need to welcome debts – After swiping it every time, you do not have to feel anxious about debts racking up with time. Besides using cash, you can rely on this card to shell out money according to your budget. You cannot spend more money as your account will have limited money for you to access.
• Cost you have to incur – Now, this issue is unavoidable as no one likes to bear the burden of fees for smaller purchases or for the convenience of accessing any time money. This is possible with this card as there will be no annual fees attached to its usage. The silver lining that sets them apart from their competition is that there are no interest fees for using them for any purchase. Whatever charges you will have to accept will be quite less than what you have to spend for holding a credit card.
• Process of obtaining – You will already have a debit card linked to your account. All you need to do is to request it by sending an application. This shall not take much time to process, and within a few days, you will have your card in your hand.

Benefits of a credit card

• Exclusive rewards – When it comes to getting this card, you cannot ignore the reward facilities. You can either earn cashback offers or points or rewards once you start using them. Redeeming them will be easy during flight or hotel booking if you have used the appropriate credit cards. With this idea, you can save a lot of money during your vacation.
• Creating credit history from scratch – If you do not have any credit history to show, you can apply for this card for credit-building purposes. Credit reports will highlight your performance as a credit card user. Since pointers like payment history and credit utilisation ratio reflect on the credit history, you can use this card as a stepping stone to create a positive record.
• Protection against fraud – The card issuer company will offer you protection from credit card fraud at their best level. Furthermore, you should handle your card carefully. In case of any scam, you do not have to worry about losing money from your account.

The bottom line

Both of them can make handling expenses hassle-free and you do not have to hold excessive amounts of cash in your wallet.