Debit vs. Credit Card: Choose Smartly

By: Makemymoney

Payment through cash was once – and probably still is the preferred mode of payment. But in the early 90s, credit card emerged and gave a huge competition to cash payment mode. People were taking advantage of this electronic mode payment and meanwhile 15 years back, the debit card has been introduced.  This is also used for making payment. Now the question is if all there are payment modes then which one should be kept on preference. Let’s learn more about Debit vs. credit card and how to choose one smartly through this blog.

Both credit and debit cards are payment system but quite different from each other. Both have their own types of advantages and functioning.  Let’s understand the basic functioning of debit and credit cards. Basically, there is no major difference between debit card and cash. Both are used for making immediate transaction or payment of money to the seller from the buyer. The only difference is the debit card makes an electronic payment and in cash physical money is given.

Similarly, there is no difference between credit card and loan. When a user swipes a credit card, the issuing bank makes payment to the seller on behalf of you. And, in return, you pay money to the bank when the credit card bill becomes due. The bill of credit card is generated on a monthly basis.  Payment through credit card is also known as “short-term” loan

When you should use Debit Card


Cash Withdrawal from ATM:

Use Debit card to withdraw money from ATM, avoid using a credit card. Because for cash the interest starts the moment the cash is dispensed. And in addition, we also have to pay additional taxes and all.

Paperwork & bill avoider:

There are people who don’t like to do lots of paperwork and usually forgot to make bill payments on time. For such people making payments through debit cards is best. Because credit card means the addition of paperwork and in case you forgot to make payment on time there are penalty charges also. Hence, go ahead with bill free debit cards. 

Control useless Spending:

 When we make payments with a debit card, we remain cautious. The reason is simple the amount available in an account is almost limited, and users remain with no choice but spend only over necessities. This helps in excluding needless transactions.

No enormous interest costs:

In case of a credit card if the bill is not paid on time then there is always a risk of huge interest. However, in the debit card there is no such clause, and so this keeps your finance safe and secure.


When You should use Credit Card


To make a good credit score:

 The credit score is becoming an important parameter for getting loans and at low-interest rates. If you are good at making payments on time, then transaction through credit cards is best.  This will be helpful in borrowing loans in the future.

Online shopping mania:

If you shop online frequently then virtual credit card or VCC is best for you. Most of the banks allow creating a VCC out of limit sanctioned on CC. This reduces the risk of hacking of details, via protecting all sensitive details.  

Low bank balance:

A credit card is helpful when you are running with low bank balance. In such a situation, you are left with no choice but to use your credit card. And if you hung with such situation then make sure that you limit your purchase to essential requirements. And make your bill payment on time to avoid creating any interest burden.

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