Debit or Credit? Which one should you choose at the checkout?

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Whether you should choose debit cards or credit cards while making payments is a question that has been in existence ever since electronic methods of managing money came into being. Then again there was the recent recession, which saw many people burdened with unbearable credit card debts. Although many people think that if they don’t take credit cards they will not get into trouble of debt and this is why they don’t apply credit card online. However, there are many benefits of using credit cards and the answer to the question asked above is that you should maintain a balance between using credit card and debit card. Using credit card wisely is very important.

debit and credit cards

Pros and cons of using Debit Cards

Making payment with debit cards means that you are spending the money that you already have and usually there are very few or no rewards attached to making payments with debit cards. However, with debit cards you can be assured that you will not over spend beyond your budget and ability and hence you will be able to avoid the burden of debt. At the same time, you can keep a track of your earnings, spends and savings when you make payment with debit cards because, you get your bank statement at the end of every month. There is no spending limit on debit cards and you can spend as much money you have in your account which is good for making large payments.

On the other hand there are some disadvantages of making payments with debit cards. This is because your debit card is directly linked to your bank account. As a result, if someone hacks your debit card, they will have access to all the money in your bank account and they can withdraw all the money. There is little or no protection provided by banks against debit card theft and misuse. Identity theft is also easier with debit cards and there are instances when the entire savings of people have been wiped out from their bank accounts because of debit card theft.

Pros and cons of using credit cards

Using credit cards is essentially taking a loan for the amount paid by the bank or credit card company. Usually card companies provide a grace period which is around 30 days before they start charging interest on the amount that they have offered you as loan. Hence if you pay off the entire credit card bill every month, then there is no risk of incurring interest on the amount that you spent on the credit card.

There are many benefits like cash back, travel rewards etc. that you get with credit cards. At the same time, you can also take bank loans against your credit cards at reasonable rate of interest. Also, you can buy items on installment with the help of your credit card and this too is usually at a reasonable rate of interest. Hence there are many benefits associated with making payments with credit cards, which is why you should apply for credit card online.

However, there is one great disadvantage associated with credit cards and that is the risk of overspending. Due to the fact that money is not immediately leaving your bank account or wallet, most people tend to overspend. At the same time, some people spend beyond their capacity to repay which results in a vicious cycle resulting in insurmountable credit card debts. This was the reason for many people going bankrupt in the US until recently. However, if you use credit cards responsibly then there is no such danger and you can reap the several benefits of credit cards.

As can be seen using debit and credit cards have their own advantages and disadvantages and the choice to use either depends on your individual situation and preference.


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