Credit card versus debit card: which is better?
With today’s technology advancements, we are no longer required to carry cash or use checks exclusively. A common use of payment today is the use of an electronic card system, called eftpos, which allows us to use credit and debit cards. So what is the difference between these two cards, and more importantly, which one is better?
Credit cards are very useful, since they are used properly. A credit card has a fixed amount of credit assigned by your bank provider and can be used to buy products anywhere that has an eftpos system. So effectively, you are not using your money to buy anything but the bank. At the end of the month or period assigned, the bank will ask you to pay the credit used before a certain date. If it is not met, the bank will impose interest on the outstanding amount, so you, the end user, will have to pay more. Credit cards are often more advertised by banks than debit cards because banks expect to get a return on the cards from interest rates in case you don’t pay on time. So, if you can pay your debt on time, credit cards come in handy.
Debit cards, on the other hand, are a way to access your bank account; your debit card withdraws money directly from the linked account. The advantage of this system is that the money you spend is yours, there are no cash advances and no chances of getting into debt. However, there are cases where you may need money immediately and may be waiting for your payment to arrive; This is where a credit card comes into play.
So which one is better? Depending on your circumstances, a debit card may be sufficient; however, for most people, it is best to have a combination of a credit and debit card as long as the credit card is used responsibly.