DEBIT CARD -VS- CREDIT CARD
The main differences
When you pay for anything with the credit card, the bank offers you some kind of loan in order to give a chance to purchase what you want. After the payment id made, they send you the bill you’re obliged to pay. If you do not pay the sum, the credit company will change your fees and interest rates.
On the other hand the debit card is the way to get the money from your bank account. You do not use anyone else’s budget, only our own.
The cards might look really similar, yet they do have a lot of differences.
How does the debit card work?
You can use this type of card in order to pay for goods and services directly from your bank account. Use them for getting the cashback from shops which offer this kind of service.
For paying with card you will have to enter the special PIN number that is the password to your credit card and the money you’re beholding. Usually you will have to enter it into the given electronic device.
This type of cards is usually offered in various banks as one of the main ones. This card is also usually named as “cheque guarantee card”, which means your cheque will be totally honored by the bank to the fixed amount.
I’m lacking the money on my account. What will happen?
In case you’re the owner of the debit card, the following actions can be performed:
- For the “Electron”, “Solo” and other lower types of cards your balance will be automatically checked, and the transaction will not go through.
- For the cards like “Visa”, “Delta”, “Switch” etc. there will be no checking of balance, and the transaction will most likely pass through.
- If you got some of the charges overdrawn, your payments will depend mostly on your agreements with the bank. This means you most likely will make payments at the end of the month. The interest rates here are usually significantly lower then in case of the credit card.
- If your overdraft wasn’t limited, you will pay the significant fees comparing o the first option.
With the debit card you can avoid the credit card debt.
This argument is actually the strongest one in choice of the new card for a person. With the debit card you can easily control your spending and never fall into the debt hole. If you’re having the debt with the credit card, it might be really wise to get the debit card and use instead of your credit one.
The main disadvantage of the debit card is that you shall be careful with the amount of money left on it. If you tend to spend the sums without checking how much is left on your account, it might lead to the real disaster.
How does the credit card work?
This type of card is somewhat the way to borrow the money from the bank. The company offering the lending service must have the license of the OFT (Office of the Fair Trading) according to the Consumer Credit Act 1974.
Using the credit card, you can buy the things now and pay for them later. These cards are linked to the bank account, not to your own. They can be used to pay the orders in the store, through the internet or by phone.
The card provider will check out your payments time to time to see if you have to troubles with paying the taken credits. This is usually called the “credit check”.
The reason not to use the credit card
Take your rime to consider the other options before getting the credit card. This may look like easy money, still if you don’t may the full amount to the given date, you will be charged for the whole amount of the bill no matter which part you have paid already.
Talking the cash from the credit card is also risky, since you will be charged the daily interest until you return the sum. This all looks like too expensive way of borrowing. Note that some cards have the significant fee for you just having the card.
If you overuse the card, you will most likely fall into the debt and turn your life into the financial hell.
The conclusion
It’s all up to you to choose the card that suits your needs. Though the credit card seems to have a lot of benefits, still consider the risks going hand o hand with it and make up your mind. The difference between the cards is shown here, so feel free to make your choice.