Debit Card Vs Credit Card: Benefits and Rules

Debit card and a Credit card are both the plastic cards. You can use these cards for shopping, payment and withdrawal from ATMs. Then, why there are two types of cards. Why some people use credit card instead of debit card for the shopping? What are the benefits of debit card and credit cards? In this post, I have tried to clear all doubts regarding both the cards.

Useful – How To Donate in PM Cares Fund to Fight Corona

What is Debit Card

As you know, Debit card is a replacement of hard cash. You may use this card through the electronic fund transfer. So, it replaces cash when you have to pay or purchase something. Following are the main characteristics of a debit card.

• The debit card is linked with your account. That’s why when you transact through it, the amount gets debited directly from your account.
• Also, you can withdraw hard cash from ATM by using the debit card.
• With the debit card, you can purchase at the retail outlets and online.
• You have to enter a PIN to transact through the debit card. The Debit card PIN is different from UPI PIN.
• You get an SMS on every transaction through the debit card.

Also Read- What is Debit card and how to use it?

What is Credit Card

You can also use credit card for payment and shopping. You can use your credit card at POS or online transactions. Moreover, it is also available for ATM withdrawal.

• This card is not linked to your bank account.
• when you transact through the credit card, the money is not deducted from your account.
• The card issuer pays for all of your transaction.
• Thus every month, you get a monthly credit card bill from the card issuer. Then you have to pay back the bill within the due date.
• Thus, because of the credit card you have not to pay immediately for your expenses. The card issuer gives you the loan for a short period.
• In fact the card issuing bank does not charge any thing for this short term loan.
• Rather, bank charges a fees from the merchant.
• Your bank sets the credit limit of your card on the basis of your credit history. You may spend up to that limit only.
• You have to pay interest if don’t pay the bill on time. bank also charges interest from the first day if you withdraw cash using the credit card.
• The interest rate of credit cards are quite high.

Which is Better Debit Card or Credit Card?

Was it helpful for you to understand the nature of both cards? Now you are thinking about which is better for me. In some situations, you find the debit card is better, whereas in others you feel credit card is much better.

1. When a Debit Card is Better

• Through the debit card, you use your own money. There is no tension to pay. But in case of the credit card you become liable to the credit card company. The credit card puts you in short term debt.
• In case of debit card, there is no chance to pay interest. Whereas you may have to pay very high interest in case you miss the due date.

Suggested- How to Set Limit of debit card?

2. When a Credit Card is Better

• The credit card gives you the much needed money when you want to buy something but don’t have the money.
• You get money for the short term without paying any interest.
• If you pay your credit card bill on time, it improves your credit score. Thus you would get the home loan easily.
• Banks take full liability on fraud over a credit card.
• You have to pay annual fees for the debit card, but there are many free credit cards.
• By using through the credit card you do not expose your bank account to the online fraudsters.

Is Credit Card More Harmful Than a Debit Card?

Sometimes, people say that credit card is harmful because the credit card user spends beyond the limit and uses his full credit limit.

Whereas, in the debit card case, since the amount directly goes from the account. Thus people never overspends.

In fact, because of the easy money from credit card many people were trapped in debt cycle. Once, you start paying minimum bill amount, you have to pay high interest. This in turn throws you into the debt trap.

That is why credit card is beneficial only for those who can control their urge to spend.

If you pay your credit card bill on time, there are many benefits. You can get money in emergency situations. But if you often miss the due date, it is better to get rid of the credit card.

useful Post- How to Block you SBI Debit card

Suggested – Why Everyone Want this Credit Card?

When Should you use Debit Card or Credit card

You may have both the credit card and debit card. So, are you wondering where should you use these? Actually, you can use both the cards effectively and enjoy the benefits.

1. Conditions When You should Use Credit Card

• When you want to avail the reward points, extended warranty, extra insurance on your big purchasing. Because card issuers give more rewards on credit cards.
• When you are going to buy groceries, paying restaurant bills, use a credit card.
• If you want to build a great credit score. Because the debit card does not build any credit score.

2. When should you Use Debit Card

• For small purchases use your debit card or UPI payments. Why should there a tension of liability. Missing the due date can be costly to you.
• If you don’t like to spend on debt and keep your finances simple.