Often when you are not paying with a payment card in a shop or office, you are not thinking about exactly what card you own and which type of card would be more beneficial for you. Often people do not even think about it when they go to the bank and ask the bank what type of payment card they want – credit or debit card. Why? This is probably because they simply do not distinguish credit cards from debit cards and therefore do not know how one type of card differs from the other type of card and which in the end is better. So, in order to prevent you from making a mistake and choosing the payment card that is not right for you, I’ll tell you about the key differences between a credit card and a debit card, and the benefits of each card.
Credit and debit card differences
Although credit and debit cards are literally the same in appearance , as they both contain the card number and expiration date, your name, bank name and other important attributes, their use and usage characteristics are very different. If you can think of debit cards as your digital checkbook, because it is directly linked to your bank account (there may be savings accounts or other specific account debit cards) and you can only spend as much money as you have in your bank account, and the amount you spend will be automatically deducted from your bank account, then credit cards are cards that are not directly and simply linked to your bank account, so you can spend more money with them than is actually in your bank account. You can use a credit card just like a debit card – make everyday purchases, make payments, but there is one important extra to the credit card – you can use your credit card to over-budget your bank account. This means, for example, if you buy something with a credit card for $ 100 but only have $ 70 in your bank account, then the $ 30 that was not in your bank account will automatically be borrowed from your bank, creating a kind of quick credit – ovedraft. However, unlike real loans, overdrafts are usually not charged monthly, and if you pay your bank the amount of the overdraft each month after receiving your paycheck, then you only have to pay the cost of that activity when you borrow the overdraft, which in most cases is not a large sum.
But which card is better then?
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After this explanation of the difference between a debit card and a credit card, it may seem like a credit card is much better than a debit card and no doubt I need to make a credit card next time, that’s not all. While a credit card gives you this opportunity to borrow instant credit at no high interest or extra charge, which is great if you use it a few times, but at the same time, the credit card also allows you to say it over your own means and if you’re not careful with your credit card, you can quickly become overwhelmed with large debts that can then be very difficult to repay, and since your debit card doesn’t have the ability to spend money that isn’t in your bank account, you can’t accidentally spend too much on credit which you will find difficult to repay. Another good thing about credit cards is that credit card users are often given the opportunity to earn different bonuses for each of their credit card payments, but nowadays most debit cards come with a variety of bonus programs that allow you to either accumulate bonuses or earn additional discounts when purchasing these cards. Therefore, I would say that in the struggle – credit card debit card – the debit card wins in my eyes for one important reason – it is safer for you and your finances. However, that does not mean that a credit card may not be the best option for others, so I would say that you have to consider the pros and cons of each card now that you know them and decide which card is best for you.