Credit Cards Or Debit Cards: Any Differences Among Them?  

Both the credit and debit card have their advantages and disadvantages. Thus depending on what you need your card for, either of the cards can come in handy. If you are confused about the basic difference between a credit card and a debit card and want to know which is better among the two, then read on as I take you through all that you need to know.

Credit Card or Debit Card

Difference Between a Credit Card and a Debit Card

Credit Card

When you use a credit card, you are actually borrowing money which is made available to you by a bank or other financial institution. This is how it works: The institution pays the debt to the vendor and, in turn, you pay the money back to the institution. When you sign up for a credit card, you are agreeing to pay back the money that you borrowed. Additionally to any interest drawn on the amount you borrowed.

Debit Cards

Debit cards on the other hand are issued by your bank. Currently, almost anybody has a debit card since many ATM cards are programmed to have debit options. Debit cards access funds directly from the money that you have in your bank account.

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This means that it acts much like a check, but faster. With a debit, you do not have to carry cash or checks, and it comes in very handy when you need to shop at a variety of places including gas stations, grocery stores, restaurants, and retail stores. They offer instant access to your money and are accepted globally.

Debit cards are used much like credit cards. This means that the store where you are shopping ‘swipes’ them and you are normally offered the option of signing your receipt rather than using a required PIN number (you can enter your PIN number if you wish). You also do not need to show a picture ID.

Which is Better?

Credit Cards or Debit Cards, which is better? A credit card comes aks the. If you are shopping online or in-person, a credit card protects you in several ways where a debit card can’t (it includes sheltering your checking account, extended warranties, and more). However, you have to ensure that you pay off the card’s balance completely every month to avoid finance charges.

A debit card is best for cash withdrawals, and it helps you avoid overspending and keeps you from incurring debt. For ATM cash withdrawals  your debit card is your best bet. Fees are kept at a minimum, and your card information is unlikely to get stolen if you stick to safe ATMs.

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So if you know that owning a credit card will tempt you and make you rack up a huge debt, then it’s best you stick with a debit card. On the whole, you need to take charge of your spending, because the type of card you use can’t do that for you.

Use Debit Cards To:

  • Keep off debt
  • Avoid annual fees
  • Avoid credit security
  • Simplify finances
  • To make ATM withdrawals

Use Credit Cards To:

  • Complete everyday purchases without a PIN
  • Build credit
  • Pay after a grace period
  • Spend at higher limits
  • Get robust fraud protection
  • Quality for rewards
  • Provide protection if your card is lost or stolen
  • Get additional benefits, like extended warranties on electronics
  • Give a “free” month-long loan (when you pay your bill in full)
  • Enjoy more flexibility when booking a hotel or renting a car.

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