The credit card versus the debit card

Although both of these are cards issued by banks and financial institutions the benefits that they bring to the end user are completely different. Both of them are plastic money no doubt but the main difference is that with a debit cards you are spending money that is your own and in your bank accounts and with a credit card you are borrowing it from the bank to pay it later on. At face value the cards can seem the same but really there is not much reason to compare credit cards with debit cards as they are chalk and cheese!

When you use your credit cards at ATMs to withdraw money you will end up paying a huge amount as interest for availing that service whereas in case of the debit card you need not. This use of the credit card at ATMs can burn a great hole in your finances without you even being aware of it.

There is no prescribed spending limit on your debit card except per day. Otherwise you can go on and spend as much as your bank balance allows you to. Whereas, in the case of a credit card, you need to spend, only the amount allowed by the bank! There is a cap on the amount of spending that you can do with your credit card for each month.

A debit card has no fees attached to it every time that you use it. The only fees that you will find attached to a debit card are the amount that you have to pay annually. For a credit card on the other hand there are several charges and interest rates linked with it. if you are not careful in the use of your credit card you will end up in the debt cycle that you will find difficult to extricate yourself out of. The main idea behind the use of the debit card is that you are using your own money that is with the bank and the credit card allows you to use borrowed money and pay it later by way of installments or the entire amounts, in one go. Debit cards are essentially an eftpos card you can use in the same places you use a credit card so the features of the account are more comparable to a savings account than a credit card, so remember while you’re shopping around for an issuer that you are not doing a credit card comparison!

The cards, debit card and credit card both have equal amounts of pros and cons linked with it. If you are the kind of person who goes on shopping binges and aren’t savvy about your finances then you need to use Credit Cards really carefully. On the other hand, a debit card works out well for everyone no matter what kind of personality they may be.