Credit card or debit card?On December 19, 2019 by admin
Some people prefer to use debit cards over a credit card, what are the differences between these two and why one should choose one over the other.
Whether to choose a credit card or debit card depends largely on how well you have control over your own finances and money use. Here it is important to be honest in looking at their own history.
If you manage your finances well, the credit card is the most profitable solution where you can actually save money, otherwise you should strongly consider a debit card to avoid getting into financial difficulties.
Advantages and disadvantages
Credit cards have the advantage that they often have access to much better benefits. You have advantages like free travel insurance and cheaper fuel etc. With a credit card you already have money ready to use, which is a clear advantage if something should happen that requires quick payment. The disadvantage of credit cards is that you spend money you do not have and that this becomes interest-charged. Especially if one should go over maturity, the effective interest rate is often high.
Debit cards have the clear advantage that you can only use balances already available on the card. This means that you have good control over your own money while also being able to use for online trading and automatic purchases as well as withdraw money. The downside is that often you have to transfer or refill the debit card in a way and if you need money fast it is not always possible and you have to wait a day or two for the money to be in the account.
The biggest difference is that with a credit card you spend money you do not have, in a way you want to borrow money in a way while when you use a debit card you use money you have already earned. The difference is that by credit you live in arrears, while you by debit live in advance.
When should I choose what?
When you think about what you should choose, you have to be honest with yourself and know yourself so well that if you know that you are a little over-impulsive and maybe a little runaway with money that you should think carefully before you get yourself a credit card.
With such a card it can be too tempting to spend a little too much money and thus end up behind. In that case, you should consider a debit card. On the other hand, if you have good control over your own spending and good planning, a credit card will give you much more.
If you usually find it very difficult to control costs and your finances, you can get advice on how to keep track of your finances here.