Credit card and Debit card generally look similar. Both have 16 digit card number and they each have an expiration month and year. But they are very different from each other. A debit card allows the customers to spend or use the money by drawing on the funds, which are already in their accounts. Credit card,on the other hand, allows customers to spend or use the money by borrowing money from the bank which issued the card. There are advantages and disadvantages of using credit and debit cards. Let us look at them:
Debit cards are preferred by more careful consumers, who don’t want to pay any fees or interest and who generally avoid loans of any kind. As you can only spend the money, which is already there in your account, there is a certain control over the whole process.People who are impulsive spenders and are always struggling to balance their finances are better off with debit cards. Debit cards are very useful and convenient when you don’t want to carry cash around. They are totally hassle-free and give you the freedom to take out money from the ATMs or pay directly by using the card and all this without worrying about interest and fees.
Credit cards also have some advantages. They give rewards like cash-back, discounts,and points. The point system is quite attractive as, every time one uses the card, some reward points are added to the card. If one is careful and keeps track of all the payments, then one can reap rich dividends. Credit cardsare also helpful to professional, by giving them a good credit score, but only if they are regular with their payments. A good credit score is a big plus point if you want to take a loan or start a venture on your own. Some credit cards also protection like warranties, insurance and are also better at managing theft or loss of the card.
It is best to understand the difference between credit and debit cards and use them when and where appropriate. Check out the post right here. Smart shoppers and spenders can easily manage a credit card and should use it to their advantage. The less disciplined shoppers, who are impulsive, should stick to debit cards. The best thing would be to have both cards with you and use them both judiciously, according to need. They are both supposed to make your life easy, so make sure that they do that.