Determine which one to use between debit and credit card

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Often, people are confused about which one to use, debit card or credit card, while making a payment. This happens due to unknowingness about both of them clearly. When you know everything about debit and credit cards, there will be no chance of feeling anxious before making payment.

Besides, there is a myth that debit cardholders tend to the victim of fraudulent transaction than persons who don’t hold a debit card. However, it is completely exaggerated talk. Proper usage of a debit card will never evoke any financial loss. Rather help the person to enjoy the ease of payment.

On the other hand, a credit card also helps a person by providing monetary assistance and mitigating emergency fund requirements. When a person is holding a credit card, he must not take out unsecured loans for bad credit score from direct lenders. So, both debit card and credit card ease a person to utilise the money to fulfil the necessity.

Here we will discuss both of them briefly so that it will be easy to understand how you can make the best use. Let’s start with a debit card.

Debit Card

It is a plastic card provided by your bank and linked to your savings or current account. The main purpose of providing a debit card is to ease payment or withdraw money without visiting the bank. Moreover, it helps a person to move cashless as he can easily swipe the card at the shopping mall, restaurant, theatre, pub, and even in the hospital.

Besides, fund liquidity every time you go as one can easily withdraw money as per his necessity by punching the card in Automated Teller Machine (ATM). Generally, there are many ATMs available at different banks along the road. There is no necessity of punching your card exactly at your bank’s ATM, but you can choose any of them.

When you punch the debit card, it seeks a password, a safeguard feature associated with the card. After typing the appropriate password and amount to be collected, cash will be dispensed from the machine. Therefore, you will be getting a message of deduction of money from your bank account.

When should you make use of a debit card?

A debit card helps to access money that you already have in your bank account. To utilise that amount stored in your bank account whenever you need it is the ultimate benefit of using it. It is the best option when you don’t want to make any debt and pay with the liquid fund. As debit cards are always associated with a bank account, there is no chance of increasing debt.

When there is a fund in your bank, it is no use to increase the unnecessary owing amount by using a credit card. Instead, if there is a comparatively low balance in the bank account and the price of the good is more than that, it is time to use the credit card, which will provide you with the ease of borrowing in no time.

However, borrowing action can also be done by applying for an overdraft facility as well. In that case, a person can easily get the required fund from his bank to exchange fixed deposits or balance in a savings account. But be careful while applying for overdraft because banks apply a high rate of interest on OD while credit card offers the facility of borrowing is comparatively low interest.

Credit card

A credit card is a popular means of borrowing any amount of money. Starting from 100€ to 100000€ can be borrowed with it. Many credit card companies offer different type of cards to people. When it comes to credit card, it comes with huge verities, such as reward point card, cash withdrawing card, debit card and many more.

A credit card helps to pay a high amount without deducting the balance from your bank account instantly.

For this reason, it is considered helpful during emergency requirement of fund. However, the credit card is associated with the limitation of borrowing and build up a credit score. A person with a strong income base is generally provided with a huge credit limit, while people with a low-income range are not given a high credit limit.

A credit limit defines how much a person can borrow. Suppose a credit card holder with a good income range can get a high limit, i.e. up to 100000€. On the other, a person who doesn’t possess a stable source of income and the amount is comparatively low, even after getting a credit card, can’t apply for more than €5000.

There is nothing to worry about as there is another way to enhance credit limit even after having a low-income range, i.e. by timely repayment of the outstanding amount.

When should you make use of credit card?

Before using a credit card, make sure it does not turn into a habit because borrowing money often leads to financial risk. When you use a credit card as a mode of payment, it is the amount of debt that will ultimately increase. The regular monthly repayment is the only way to reimburse the outstanding amount. Therefore, it is better not to use credit cards unless and until there is a serious fund requirement.

When you have an adequate amount in your bank account but want to preserve it for an emergency fund, using a credit card to buy household gadgets can be the best option. It is hard to predict when and how urgent a situation will take place.

Therefore, it is better to persevere liquid fund and use a credit card. In this way, you need not make the instant payment but rather pay the price in a small amount with monthly instalments. It will enhance your credit score too.

If you need a fund and there is no cash left with your bank account, instead of using the OD facility, let’s use a credit card as it comes with a low-interest rate. Banks generally charge huge interest on OD, which may lead you to financial risk.

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By crag williams

Crag Williams is known for its well-explained and well-researched blogs. He possesses high experience in the credit lending and makes a significant contribution.

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