Benefits Of Debit vs Credit
Thanks to digitalization, paper currency’s use is becoming less frequent. Since most businesses are adapting to the digital landscape, online payments are increasing more than ever. This has led to a ripple effect where debit cards and credit cards are replacing paper currency. However, most people don’t understand the benefits of debit card over credit card. In this blog, we will highlight 4 reasons to choose debit card over credit card to help you stick to a budget.
Four Reasons To Choose Debit Over Credit
The main difference between a debit card and credit card is transaction through the current account. While a debit card deducts money from your bank account, a credit card is a quick loan you can apply against your limit. Here are 4 reasons to choose debit card over credit money.
1. Stay Within Budget
While a credit card has a limit to it, you can easily go trigger happy with it. However, a debit card deducts the amount from your bank account to make payments. This helps you stick to a budget and keep track of your expenses.
2. No Interest Rate
When you purchase through credit card, you indulge your finances in an interest scheme. Credit cards’ interest rate varies from bank to bank, but it may cost you more than the item you purchased.
3. Accrued Interest Rate
Accrued interest rate is a financial term most people don’t understand and end up financially hurt at the end of the month. Credit cards allow you to buy now and pay later. However, if you miss your interest payment in the current month, the following month will add interest to your remaining interest amount. For example: if your pending interest was $5 over a $100purchase, you would pay a percentage interest on $5 following the month you missed your interest payments.
4. Debit Cards Have Double Usage
Debit cards can be used at ATMs to collect cash against your account balance. However, a credit card cannot perform the same function. Moreover, a credit card requires an application and a good credit score, whereas a debit card comes with your standard bank account.
The Bottom Line
While both credit and debit cards are by-products of digitalization, they are very different from one another. Your debit card might have a financial limit to per-day transactions, whereas a credit card has a monthly limit, meaning you can’t use your debit card at an ATM for more money than you are subjected to. All in all, debit cards are a great way to keep your shopping urges under control and enjoy smooth payment with your expenses under check. A credit card can easily drive you away from your savings goal, and you will regret it later.