Credit Card Vs Debit Card: Check Out Which Is Better


credit-card-and-debit-card
Credit Card Vs Debit Card: Check Out Which Is Better
Spread the love

It is not uncommon to see debit cards and credit cards with a 16-digit number, expiration date, a magnetic stripe, and an EMV chip. Before understanding the difference between a debit card and a credit card, it is important to understand that a key similarity between both cards is that they are convenient and easy to use for consumers to make purchases online or in stores. You can use your bank account to withdraw and spend those funds with a debit card. Furthermore, you can borrow money from the card issuer to purchase goods and withdraw cash with a credit card. It is hard to beat the convenience and protection offered by these products. 

Yet there are some significant differences ranging in price that could significantly be important. If you withdraw money with your debit card, you are using your own money, so you will not be charged any fees. However, if you use a credit card to withdraw money, you do so with money you do not have. In this case, it is considered a type of loan that will be repaid with a high-interest rate.

Let’s understand the key differences between a debit card and a credit card by listing out the pros and cons of each card

Credit Card

With an RBL Credit Card, you can borrow money from a financial institution, such as a bank and use the money to make purchases. According to the institution’s rules, a cardholder agrees to repay the money plus interest. In addition, by using a rewards credit card, users may get cashback, discounts, travel points, and various other benefits that are not available to debit cardholders.

See also  Anonymous UnionPay Cards: Enjoy the Privacy!

Pros

  • Cash is no longer required since credit cards eliminate the need to carry cash.
  • Having a credit card improves your credit score.
  • With a credit card, you earn higher rewards as compared to a debit card.
  • They have relatively high credit limits, which means you have more freedom regarding spending.
  • You can use an online mode to make credit card payments. For example, if you use the Bajaj Finserv RBL Bank credit card, you can use the RBL Bank app for credit card payments.

Cons

  • If you do not pay your bills on the due date or in full, you’ll be charged a high-interest rate.
  • If you miss a payment, it can have an adverse effect on your credit score. Once your credit score declines, it can be hard to improve and take a lot of time as well.
  • With or without a credit limit, there is always the possibility that you will overspend.

Debit Card

When a consumer uses a debit card to purchase, the money will be taken directly from the card holder’s checking account rather than borrowed from a bank. As long as the debit card is issued by a major payments processor like Visa or Mastercard, debit cards have the same benefits and many consumer safeguards as credit cards. Some consumers may prefer to use debit cards over credit cards because there are typically few or no associated fees when using debit cards until they go over their account balance and incur an overdraft fee.

Pros

  • Since you are using your funds, this is a debt-free transaction.
  • It is less expensive to use as cash withdrawals, or payments have no interest charges.
  • Getting a debit card is easier and faster than getting a credit card.
  • CIBIL Score check is not required for getting a debit card. Your savings account is sufficient enough to own a debit card.
  • Maintaining a record of your spending makes it much easier to balance your bank account at the end of the month.
See also  What is OneCard: Let's Know About the Credit Card OneCard, OneCard Founding Team, Revenue, and Many More

Cons

  • Direct debits are made from your account, so you cannot leave your money in your account.
  • Builds no history of credit with the credit bureaus
  • You might be charged a fee if you use an ATM of another bank to withdraw money or if you withdraw money more than the specified time.
  • The protection against fraudulent debit card transactions is very limited.

Final Thoughts

Although the debit card and credit card may be similar in terms of service, the benefits and drawbacks of credit cards and debit cards are vastly different. Credit cards are a crucial tool for your financial journey when building credit and taking advantage of rewards. However, a debit card is a better option if you want to better grasp your finances than a credit card. To make an informed choice, it is important to understand the expenses associated with each account.

Read Also – A Brief Guide to Bajaj Finserv Insta EMI Card


Spread the love

Maria