Credit v/s debit cards: Which one to choose

Business

29 Jan 2019

#FinancialBytes: Credit or debit card- what is better for you?

Credit and debit cards are two of the most popular cashless payment methods.

However, many people often have a hard time deciding which one is better - credit card or debit card. They might seem similar, but they are not and have some important differences that affect one's finances differently.

Here are some factors to consider for choosing between credit cards and debit cards.

#1

If you're concerned about security, go for credit card

If you're concerned about security, go for credit card

Nowadays, credit and debit card frauds are on the rise. While details of both these cards can be stolen, in the event of fraud or theft, debit cardholders lose money from their linked bank account.

Unlike them, credit cardholders don't lose anything from their pocket.

While both these cards offer zero liability in such cases, credit cards offer greater protection compared to debit cards.

#2

If you already have debt, debit card is better

With high interest rates, maintenance charges, minimum fee, etc., credit cards might push cardholders into debt if they are not careful. So, it's better for people who already have a debt to avoid credit cards as they will increase the burden.

Those with many financial obligations or people who don't have enough/regular income should not take credit cards to stay away from trouble.

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#3: People with bad spending habits must choose debit card

With credit cards, some people, especially those with bad spending habits, might get into financial trouble. They might spend more using credit cards than they usually would; this increases their expenditure. To control spending, debit cards are the best to overcome the temptation of credit.

#4

Want to enjoy rewards? Then, credit cards are better choice

Want to enjoy rewards? Then, credit cards are better choice

Those who can control their spending can, however, go for credit cards to enjoy various benefits and rewards.

There are different credit cards to cater to different needs, including frequent travel, fuel purchases, and shopping.

Customers can save a lot if they use credit cards wisely. They can enjoy discounts on transactions, cashbacks, fuel-surcharge waivers, reward points for spends, travel points, gift vouchers, etc.

#5

If you have good income, you can take credit card

Credit card providers charge high interest rates on the outstanding balance. Apart from the monthly interest, customers have to pay joining fees, annual/renewal charges, late-payment fee, and other fees which increase expenditure.

But people having good income can take credit cards and enjoy exclusive rewards/benefits. Those who can't afford credit cards must, however, stick to debit cards as they come with comparatively fewer fees/charges.

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Most asked questions

Which credit cards are the best for enjoying rewards in India?

What are some credit card mistakes to avoid?

How to save some money using credit cards?

What are the credit card options for people with no income?

More questions

Which credit cards are the best for enjoying rewards in India?

Asked 2019-01-29 21:31:21 by Muhammad Chatterjee

Answered by NewsBytes

Here are some credit cards offering good reward points and other benefits: Standard Chartered Platinum Rewards Credit Card, SBI SimplyCLICK Advantage Credit Card, YES FIRST Preferred Credit Card, HDFC Diners ClubMiles Credit Card, and Citi Rewards Credit Card.

What are some credit card mistakes to avoid?

Asked 2019-01-29 21:31:21 by Arjun Kapur

Answered by NewsBytes

If not used wisely, credit cards can be a huge burden. Here are some mistakes to avoid: Having too many credit cards; they increase expenditure. Paying only minimum due amount instead of focusing on clearing the outstanding balance. Defaulting on bill payment and high credit utilization. Withdrawing cash using credit card; it attracts very high interest. Ignoring monthly statement and blindly pay the bill.

How to save some money using credit cards?

Asked 2019-01-29 21:31:21 by Sai Jhadav

Answered by NewsBytes

Credit cards can help you save money and earn rewards. Here's how: Avail discounts, deals, and cashback offers to save money using credit cards. Save on fuel purchases through fuel surcharge waivers or reward points. Avail travel offers, restaurant deals, and free movie tickets. Earn reward points for transactions and redeem them. Avail No-cost EMI and flexible EMI offers.

What are the credit card options for people with no income?

Asked 2019-01-29 21:31:21 by Sai Gupta

Answered by NewsBytes

In India, some banks issue credit cards to people with no income, including students, against fixed deposits and strong savings accounts. Some options include: Axis Bank Insta Easy Credit Card, SBI Card Unnati, ICICI Bank Instant Platinum Credit Card, and Kotak Mahindra Bank's Aqua Gold Credit Card.

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