Playing Cards: Debit vs Credit

A debit card is a card having an expiration date, magnetic strips, and a 16 digit number on it. It is like having your bank account in your pocket. Most of the cards are atm cum debit cards. Credit cards are also very much similar in appearance. Both can make travel, shopping, and other things very easy for you.



What’s the difference

The main and basic difference is that a credit card is a type of loan in your pocket and whenever you make a payment with a credit card your bank pays on your behalf of you and you pay back the amount at the end of the cycle. When you make a payment with your debit card the amount is deducted directly from your bank account. Now both cards have advantages and disadvantages also. Let's breakdown it further


Disadvantages of credit card

The very haunting disadvantage is if you don’t pay within the time cycle they charge you a

penalty and the penalty is very high. The interest they charge you after the due date can go up to 36%. Another disadvantage is there are lots of hidden charges every time you swipe your credit card through a POS machine the card company charges you 1.5-2% due to which many shopkeepers add 2% on the bill. Also, you will be charged a certain percentage. Annual fee and other fee makes it unaffordable for many people.


Disadvantages of debit card

Though there are not many but to count debit cards won't give you rewards and won't allow you to help a credit score which is not the case with a credit card. Now what's a credit score


Credit score

A credit score is a type of score given to you based on your capability to handle your credit limit which ranges from 300 to 850 where 300 is very poor and 850 is excellent if you repay your credit on time without any delay, use 10-30% of credit limit your credit score will automatically be good. A good credit score can fetch you loans at very little interest and very easily. Now let's move to the Advantages


Advantages of credit card

The main, and according to me, the very helpful advantage is you get an interest-free loan for a short period. You don’t want to pay right now, you have invested your money for a short-term credit card and got your back. Another advantage as I discussed is that a credit card helps you in building a credit score. You might think that does not make any difference but it does create a difference. Credit cards give you a lot of rewards, many credit card gives you free lounge access at airports that’s like saving 1000s of rupees, most of the sites you see give you cashback offers on credit cards, not on the debit card.


Advantages of Debit card

“Debit card is your bank account in the pocket”. You need cash but do not want to go to the bank or pay any charges debit card is there. You want to shop but don’t want to carry cash just carrying a debit card will be enough.


Fraud protection

If you encounter any fraud with a credit card you are not legally liable to pay anything if you

report it to the concerned authority within 3 days. In the case of debit cards if you encounter fraud your money will be gone immediately. Because of this reason many people say credit card is the safest form of money that can ever exist.


The big scam- minimum due


When your credit card bill comes most companies do not want to pay in full. There is a column minimum due which says you just have to pay 10-20% of your bill. Once you pay the minimum amount they will charge a high amount of the remaining amount and it will continue to accommodate.


Conclusion

Both cards have their pros and cons. After this article, you might feel the credit card is the best thing you can get but you need to understand that if you do not pay on time one day your penalty will be more than your due amount. In my opinion, you must have both cards in your wallet and if you can use them wisely, you are at a very big advantage that you will realize later.

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