It seems that cash is going to soon meet its end. With the global push for digital payments, supported by technological advancements and greater access to the internet, seamless and frictionless digital payments are becoming more ubiquitous than ever. There are a number of alternatives to cash that exist. From credit cards and debit cards, net banking as well as UPI options, the list is endless. The credit and debit cards are two most common modes of digital access to one’s bank funds and chances are, if you have a bank account, you probably have one or the two if not both in your wallet right now.
What is the difference between credit card and debit card, and which one is the better option for you? Let’s dive deeper.
Debit Cards
A debit card is essentially a tool that allows individuals to access the funds in their bank account from a location away from the bank, via swiping the card. A debit card, as the name suggests, is a direct transaction from the cardholder’s account to the receiver’s account. Therefore, if one were to chart a transaction course, there would be but two points on it. The sender (the cardholder) and the receiver, being connected by a single line.
The prime benefit of a debit card is that it is impossible to accumulate debt on the card, as you can only spend money you already have. This characteristic makes having a debit card the preferred options for individuals who are saving oriented and do not like to take on the risk of debt. Using a debit card also ensures that you are more conscientious with your spending, as the deduction is an immediate decrease in wealth.
The downside to debit cards of course, is that there is no wiggle room. A debit card limits its holders to the balance in their account. Therefore, even if one is in an emergency, they will not be able to use the debit card to temporarily put out a short term fire and be able to make arrangements for payment later.
This characteristic highlights a key difference between debit and credit cards.
Credit Card
A credit card can be simply understood if one looks at it as an instant loan feature. Unlike debit cards, customers need not have a given bank balance to attain a certain credit limit, which is essentially the amount they are eligible to take on loan from the bank.
However, credit cards also result in credit card debt, which is simply the amount you took on loan from a bank to fuel a purchase and must be paid off periodically. If you don’t do so, your credit card debt will begin to accumulate interest.
The obvious advantage of a credit card is that the card holders don’t need to don’t actually need to have funds in their account to make purchases. For instance, an individual can have a credit limit of 50,000 rupees a month. Even if the individual has 1000 rupees in his account, he or she can spend up to 50,000 each month in the form of a loan.
Since credit card bill payments and interest rates are very strict, some individuals take out a personal loan to pay off their credit card debt. By doing this, they make sure that they do not miss any payments , resulting in no interest payments and a good credit score. Meanwhile, the individual can repay the personal loan under less stress due to the relatively relaxed guidelines and interest rates of personal loans.
Credit cards are very useful when one needs to make an immediate purchase, and solve for an emergency. By taking money on credit from the bank, the individual is able to effectively surpass their actual spending limit. As long as you have a steady income, and are confident of being able to meet your credit card bills, a credit card is a great way to ensure that you can live the life you want to, without financial worry.
Conclusion
The question about ‘which to pick, a credit card or debit card is often circumvented by individuals as they simply opt for both despite the difference between credit card and debit card. The debit card allows for easy transactions straight from their bank account with no stress of debt, and the credit card allows them to cover up additional expenses if they arise.
However, if one were to choose one, possessing a credit card can come with significant key advantages over a debit card. Presuming you possess the discipline to pay off your credit card bill each month, possessing a credit card will release you from the shackles of waiting for payments or salary as you can spend the money even if you haven’t currently received in, and then pay it back in your own time when you do receive your payments. If you’re in the market for a Credit card Finserv MARKETS has an extensive range of credit card options that customers can browse and choose from at ease from the convenience of their home. With support for most standard banks, customers need not worry about bank specific options, Finserv MARKETS offers credit cards across banks and also offers a number of thematic credit card options such as shopping credit cards, travel credit cards as well as fuel and lifestyle credit cards. Hurry!! Apply for a credit card today to avail exciting deals and offers.
