Credit vs. Debit Card

These non-cash options are your everyday saviors.
 

   
They not only help you settle your bills and pay for your groceries without worrying about cash, they are also there for emergency situations. Credit cards and debit cards practically run your life on a daily basis. How exactly do they help you? How do they differ from each other? Here are the FAQs on credit vs debit card.

Credit vs Debit Card: What are they?
Though these two can be used interchangeably, they are very different plastic cards. A debit card is a convenient alternative to cash without the interest. It is linked to your bank account so every amount you charge on it is automatically deducted from your account. Unlike the credit card, a debit card lets you see how your balance goes down with each transaction, helping you to keep track of your spending habits and avoid overspending.

A credit card, on the other hand, allows you to spend more than what you have and postpone paying. It lets you use the card issuer’s money to make purchases and lets you pay it back later. If you do this within the grace period, you can avoid paying the interest. However, if you don’t, you might end up paying for twice the amount your purchase cost.

Credit vs Debit Card: What they can do.
Since a credit card lends you money, you can spend more than you can afford and pay on an installment basis. It also provides rewards programs that can range from gift cards to cash banks to merchandise, and even travel packages. However, credit cards can lead you to large amount of debts when not used responsibly. If you want your financial life on track, you are better off with debit cards and your own money.

Credit vs Debit Card: How they started.
Credit cards started as store cards in the 1950s. Diner’s Club is actually the first credit card in history. Debit cards, on the other hand, were introduced in the late 70s by Seattle's First National Bank as guarantee cards for business executives. As of June 2009, there are around 1,113,100,000 Visa, MasterCard, American Express, and Discover credit and debit cards in circulation in the United States alone.

Credit vs Debit Card: Which is better?
The answer to this question is relative to your lifestyle as a consumer and your spending and payment habits. If you want to keep your finance records straight and avoid fraud and identity theft, the debit card is for you. However, if you’re into establishing and improving you credit history for mortgage and car loans, you are better off with a credit card. Not only does it give more flexible financial schemes, it also offers better consumer protection.


  

Source: Credit Cards For People With Bad Credit Rating


 Print this page
  |     Bookmark this page