Comparing Credit Cards And Debit Cards
Both credit cards and debit cards can offer great convenience to cardholders. As everyone has different needs and preferences though, the choice between a credit and a debit card is not always clear.
Credit card advantages
1. Provided that you will pay at least your minimum payment on time, you will be able to build a good enough credit.
2. Most of them give you rewards that can be used for gifts or discounts on certain products and services.
3. Big protection is offered when it comes to fraudulent charges. In the event of a fraudulent charge, you can make a dispute claim to your card issuer, so that the specific charge will be removed from your balance. You will not have to pay for it.
4. In case you are not sure if you want to proceed with a purchase, you are able to withhold your payment..
5. You have the opportunity to make many and big purchases, as several credit cards offer big spending limits.
Credit card disadvantages
1. Having to pay for interest. Unless you are able to pay the whole amount each month, in addition to the cost for the purchase you made, you will also have to pay a certain amount for interest as well.
2. Having to pay for extra charges. If you are late with your payments you will be required to pay a certain amount for extra charges as well.
3. Having to pay for annual fees. Most credit cards have an annual fee that you will have to pay once a year. Even though the amount is usually not big, it is still a cost and if you have to pay for interests and extra charges at the same time, it can be quite disturbing.
4. Getting carried away easily and end up spending more. Due to the fact that only a minimum payment is required of you each month, it is easy to overspend, especially when your credit card has a big spending limit.
Debit card advantages
1. Overspending is unlikely. When using a debit card, money is deducted straight from your bank account, which means that if there is no money left in your bank account, you will not be able to proceed with the transaction. Furthermore, transactions with a debit card make your bank balance go down, while the opposite happens with a credit card.
2. Good substitute for cash. Using a debit card is quite similar to using cash, with almost every store accepting it instead of cash. By using a debit card, you do not have to waste time by going to ATM machines, worry about losing your wallet or count every penny.
3. Reasonable fees or no fees at all, as
well as no interests. With most debit cards you will not have to pay fees, or if you do they will be very reasonable ones compared to the fees you would have to pay with credit cards. You will not have to pay interests either.
Debit card disadvantages
1. In the event of fraud, the protection offered to the debit card cardholder is not as much as there is for the credit card cardholder. Things can get even more difficult if there is a delay in reporting the unfortunate event.
2. In case you are not sure if you want to proceed with a purchase, you are not able to withhold payment. Since the money is automatically deducted from your bank account, by the time you decide you want to reconsider a purchase, chances are that the merchant will already have your money. To get your money back a mutual settlement in your favor must take place and that may take a while.
3. In case of fraud or dispute, you run the risk of being left with no money at all in your bank account, as your debit card is connected to it. Furthermore, that can lead to other transactions defaulting and that in turn will require the payment of extra fees.
Credit cards and debit cards are both equally useful, yet in different ways, so everyone should make the choice that best suits his needs, after carefully considering all pros and cons. It is important to take your time with this, as a bad decision can have detrimental effects.