Most people do not know the difference between debit and credit cards. They don’t even know how to use them, or what their benefits and disadvantages are. You can do more with them than simply accessing your money. In essence, debit cards allow you to digitally access your money on your bank account. When you use a debit card, money is instantly withdrawn from your account. Credit cards are operated differently. These cards operate on the basis that they are a kind of loan or credit line. This loan has no interest as long as it is paid off on time. Credit cards aren’t directly linked to your account. They are instead connected to the organization or bank who gave you the credit card. If you buy something on credit, the money you paid is now yours to pay back the card issuer.

Debit cards are generally free of charge with transactional accounts. The cards can be used to withdraw cash at ATMs. Credit cards On the other hand, they often include reward or loyalty programmes. We’ll look at the advantages and disadvantages of both types of cards to help you decide which one is best for you.

CARDS CREDIT

A monthly credit card bill is sent out every month, listing the transactions made and the payment required. Credit cards can be hard to get because they consider your credit score as well as other personal information. The card issuer decides the spending limit. The limits can increase or decrease depending on the creditworthiness of your account. Interest is charged if your bill is not paid by the due date. Interest rates are generally high.

Many users are concerned about fraud and security. The security of your card is constantly improving but you still need to be aware. It is sometimes a good thing to keep your credit card limit low. Fraud liability in such cases is virtually non-existent. With today’s credit cards, fraud isn’t a major issue.

It can be difficult to understand the charges and interest rates of credit cards. Many people choose debit cards because of their simplicity. They can buy anything and have the money taken directly from their account. However, credit card issues are almost always the result of user error. If you pay the monthly balance, no interest will be charged. Again, the only problem with credit cards is user error. You can use credit cards effectively if you control your spending and understand it.

Credit cards help you improve your credit score. Your credit score will allow you more credit. rewarding credit cards. Using credit cards more often will make you safer, as we have already stated. Once the money has been deducted from a debit card, it is literally gone.

What are the steps to use a credit card correctly?

• Avoid cards that have annual fees. With so much competition available, it is not worth paying an annual fee.
• Set a budget, and stick to it. If you don’t, you could end up spending more money than you would normally if you were using cash or debit cards.
• Never pay the full balance of your monthly account.
• Stay under your credit limit at all times. A budget will help you to control your expenses.

Credit cards provide you with great opportunities to make the most out of the credit but also create the ability to ‘stuff up’. Look at debit cards instead if you aren’t sure you can use them correctly.

DEBIT CARDS

Debit cards are easier to use. Debit cards are easy to obtain, use and understand. There are two main benefits of debit cards. First, there is no minimum charge. Second, debit cards can be used in more places. The second point may not be a major issue, but it is true that there are more places accepting debit cards than credit cards. If the seller must receive payment instantly, debit is the most suitable option. Payments via debit are instant. Payments made with credit cards may sometimes be delayed by the time it takes the credit card company to process the payment.

Debit cards can help you manage your finances and keep a strict budget. You won’t be able to spend more than your budget allows and will always keep in mind the balance of your account when you are shopping.

Travel insurance is one of the reasons why it’s a good idea to use a credit card when purchasing tickets and accommodations for a trip abroad. If you need foreign currency, use your debit cards to withdraw cash from ATMs. You get much better exchange rates.

It is best to link your debit card to an account with only money in it for transactions. If your card gets compromised, you won’t lose everything.

Debit cards are simple and straightforward. You should avoid using your debit cards in certain places. Using a debit card to make online purchases can be very insecure, as you are not protected. Also, supermarkets and petrol station are not good places to use debit card. These places are rife with card skimmers, and using your debit card offers you no protection.

WHAT SHOULD YOU USE?

You make the decision. You are aware of how much you spend, and on what. If you can control your spending, and have the discipline to pay on time each month, a credit card may be the best option for you. Stick to a debit or credit card if you are unable to control your expenditure and you feel you may abuse the credit line.