Most of us have one debit card and a credit card in our wallet. Typically, both these cards have the same kind of logo from a major credit card company like Visa or Master Card. We all can swipe these cards to purchase goods and services at retailers.
Credit Vs Debit Cards –
The primary difference between these two cards is from where the money is drawn from, when a purchase is made. When a person uses a debit card the money gets charged directly from his or her bank account and when he or she uses a credit card for a purchase, the purchase is charged to a line of credit for which the payment needs to be done on a later date.
With a Credit card there is always a risk of spending more than your means. Your credit card’s credit limit cannot define your spends in your monthly budget. However, credit cards can help you in an emergency and give you some time with the cash before the bill becomes due. This coverage can be helpful in situations when you need to pay a big amount before your payment arrives. But in case you are not able to payback the full amount by your due date then it can invite high rate of interest on your borrowing. A better solution is keeping an emergency fund always ready for such scenarios.
Debit card is a better choice as it stops you to overspend since you will be limited to only the amount available in your bank account. You can enjoy same convenience as a credit card without the need to borrow money or pay interest and fees on your transactions. Choosing debit is good for managing your finances and helping you to live within your budget.
When to choose your Credit or Debit Card –
You need to be honest with yourself and your ability to handle credit. It is better to use a debit card if you have spending issues so that you can save yourself from falling into credit card debt.
Choosing the card also depends on your purchase. Sometimes using a debit card becomes inconvenient when few merchants ask you for some additional proofs before they accept your booking. In such cases, using a credit card makes you more comfortable.
If you are trying to build your credit score, using your credit card occasionally will be a good choice. You must ensure to pay your bills on time which will create a record of responsible and creditworthy behavior which gets reported to the credit bureaus and gets reflected on your credit report.
If you want to take advantage of the credit card reward programs, using the credit card is a better option if you pay off your outstanding balance in full every month.
Protection from Frauds –
All your debit and credit cards are protected from identity theft and frauds. In case any of your card gets stollen or you lost it somehow, you should contact your bank immediately. Most of the banks have 24 hours helpline these days, sooner you call or report its better. You will not be liable for any of the fraudulent charges made with your debit or credit card after you report it to bank authorities or the card issuer. If someone uses your card before you report it lost or stollen, your liability will depend on your bank or card issuer policies.
Once your report the missing card, you also should share a written statement either by letter or email. You need to screen your account and check for the transactions that you didn’t make and report it to the bank.
Check your credit report to ensure your identity was not stollen and if yes then you might need to even freeze your account to avoid further fraud.