“Debit or credit card” Which one to go for?
Today we live in a plastic age, due
to convenience offered by plastic money. Credit and debit cards have gained
popularity as they offer us the convenience of eliminating the need to carry
cash. However both these cards have their own features, advantages and
disadvantages.
Pros:
- No
need to worry about late fees or interest charges as you are using your
own money.
- Impossible
to get into debt, as the highest amount you can spend is limited by your account
balance.
- Cash
withdrawal through debit card is not charged.
Cons:
- No
rewards, cash back or points earned on purchases.
- No
redressal available for fraudulent debit card transactions.
- Inability
to build credit score, making it difficult to get a loan in future.
- Inability
to purchase items whose value exceeds your account balance.
- Most
banks charge you debit card fees.
Credit card: A
credit card is a card that lets you purchase goods on credit. You need not have
money in your bank account in order to spend. Your bank gives you a line of
credit. When you pay using a credit card, the merchant checks your available
line of credit and approves your purchase if the balance available is more than
the purchase amount.
Pros:
- Helps
you build credit score.
- Rewards
you with points, rewards, cash backs etc.
- Allows
you to seek redressal for any fraudulent purchases.
- Most
credit cards (entry level) are free.
- Allows
you a grace period to make the payment.
Cons:
- Easy
to fall into debt as you can easily go overboard with spending.
- Heavy
interest rates and fees charged if you fail to pay the bill or pay late or
partially.
- Late
payments will ultimately affect your credit rating.
- Cash
withdrawal attracts high interest.
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