Credit Cards vs debit cards

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Should you carry credit card or debit card? This is the primary question that pops up in everyone's mind before accessing e-shopping. Many people fail to understand the thin line of difference between credit card and debit card. Credit cards vs debt cards makes way for the never ending debate. A credit card allows the cardholders to use the money in their account and at the same time, it also gives the leeway to spend more than your limits. On the other hand, a debit cardholder can only spend the money of his account.

Basic features of credit card: Credit card companies will allow you to borrow to a certain extent. You can spend beyond your savings account limit, which will be provided by your bank. You, in turn have to pays off the debt to your financial organizer within the prescribed time boundary. In addition to the debt, you have to pay the interest on your borrowed amount.

Basic features of debit card: Debit cards can act like an ATM card. The cardholder can use the card whenever he wants to make a transaction. In a way, debit cards are like checks, which work instantly without the waiting period. Debit cards are being issued by your bank and you can use the amount, you have in your account. Debit cards do not allow you to spend beyond your limitations. With debit cards, you are using your won money in a faster way.

Different between debit cards and credit cards: Both credit cards and debit cards are acceptable worldwide. Debit cards can be used as credit cards, but these two cards have some basic differences. Firstly, credits cards know no limit. The cardholder can spend with his heart's content with a credit card. On the contrary, debit cards restrict you to access your account with its monetary boundary. With the credit cards, the cardholder has to pay back his debt to his bank.

There is another different between credit cards and debit cards. When the cardholder uses the credit card, he needs to give his PIN number, but with debit cards, there is no need to submit your PIN number. The debit cardholder can only sign the receipt to complete the formalities. With debit cards, the cardholder should not always show his picture ID.

Pros and cons of credit cards: The most important advantage of credit card is you do not have to worry about your monetary limitations before your purchase. The terms and conditions may differ from one company to another, but generally the financial company give a 30-days period to pay back your debts. The cardholder can pay partially if he avails some special terms in your plan.

The drawback of credit cards is sky is the limit of spending, if you own one. The cardholder often ends up with a large amount of money while shopping with a credit card. If someone does not know where you put a full stop, credit card may land them into larger debts.

Pros and cons of debit cards: You always know the status if your account and accordingly you can set your expenses. You will not have any worry regarding your debts. It is more like making cash transaction without carrying them. The cardholder often restrict himself from shopping if his account does not contain that much amount. This is the biggest issue with debit cards. If you do not have enough cash in your account, you cannot use it.

Last Updated on 05/03/2011