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Credit Card vs. Debit Card: Why You Should Choose One Over the Other

Credit cards and Debit cards offer an easy, cashless, and fast method of payment, minimizing the need to carry hard cash for making any purchase. With their first appearance as Diner cards originating in the late 1970s, credit and debit cards have taken over the conventional methods of payment. Nowadays, every bank and other notable financial institutions have specialized cards that promote the cashless transfer of funds with optimum security. Both have alluring advantages. Wondering which one to choose? Read on to get your answer!

Working principals

Credit cards are like a loan. When anyone purchases something via the card, they are loaning in a certain amount of money, which they have to repay as their monthly Credit card bill. Credit cards are only issued to people who have a fixed and certified monthly income which is not likely to get affected by trifles, making them exclusive. Credit cards charge a small fee for the annual service it provides.

A debit card, on the other hand, is like a portable plastic check which is directly linked to the bank account of a person. Any transition of money is directly debited from the owner’s bank account. The Debit card requires an owner to keep a minimum balance in their respective bank account to promote fluid transactions.

Credit report

Credit cards have a direct link with the cardholders’ credit report. Individuals with higher credit scores have higher chances of getting approval for a credit card. If a cardholder pays off the Credit card bills timely, it will take their credit score higher and if the payments are not made timely, it will negatively impact the credit score. On the other hand, since you are not taking any credit via your Debit card, you don’t need to bother about the credit card score.

Charges

Debit cards do not charge anything for any transaction until and unless a person is overspending. Which is shown as overdue fees in their bank statements. On the other hand, Credit cards come with high interest rates. Credit cards will further levy taxes and additional fees on the loaned amount.

Getting approval

In today’s time, availing both debit cards and credit cards is easy. However, availing a Debit card is easier than availing a Credit card. Anyone can get access to a Debit card by opening a savings account at any bank. However, availing a Credit card will require many important factors like a high credit score. Basically, anyone can avail a Debit card, but Credit card is not that easy.

Security

Credit cards can directly send messages to owners whenever any unusual transaction occurs. Debit cards will not offer such a great level of security. If someone has stolen your Debit card, they can sweep your bank account clean within a single transaction.

Rewards

Both Credit and Debit cards provide rewards and other facilities on transactions from specific verified buyers. For example,  the ICICI Credit card will reward every purchase over the sum of Rs.1000 to anyone who shops at Amazon or other certified e-commerce websites. Credit cards provide more exclusive rewards and added facilities than Debit cards. 

These are the few traits of both Credit and Debit cards that each provides. Both the cards have individual advantages and flaws. Credit cards provide a higher level of security, a bigger spending limit and better rewards and offers. Debit cards, on the other hand, provide direct access to individuals’ bank account providing real-time spending feedback and no-cost service.

How can one choose which one they should pick? 

Choosing between a Debit and a Credit card is a tough call for many reasons. Debit card is readily available and does not levy and charge but does not have even half the level of security that Credit card Offers. On the other hand, Credit cards may have all glittering features, but their boundless spending can promote overspending for many young or new users. Plus, a lot of people may vote against additional fees one has to pay for using a Credit card. 

Thus, If you have a constant source of income with moderate spending habits, you can go for a Credit card. And if you are still new to cashless transactions, better start off with a Debit card. 

India’s biggest private banks like ICICI, HDFC, Canara, etc., provide Credit cards for bare minimum fees. ICICI Credit card, which is released to promote cashless drive among its new users, charges as little as Rs.99 annually for all its services, making it easy and affordable to everyone.

Read Also: Benefits of Having a SBI Credit Card

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