One of the best ways of purchasing different services and products you need on a daily basis is a credit card or debit card. Both credit and debit card are the same in that regard considering they help you purchase the different items you require.
The glaring difference here is that while debit cards you’re spending money you have in your bank account, credit cards are actually credit facilities advanced to you. It’s borrowing money that you’ll have to repay at a specific pre-agreed time.
Debit cards mean you’ve money in your bank account, and you’re using that money via the card. A credit card allows you to borrow money from the card provider that you also need to repay when the time comes.
Debit cards have their benefits
Availability: One of the easiest cards available to people today is a debit card. It makes the management of daily banking so easy and efficient. By 2018 in the UK, 100 million debit cards were in circulation.
Better financial management: A major strength of a debit card is the ability to help you manage finances perfectly. You are actually spending money that you have, and the card is a good pointer of how much you’re spending on household items and other related monetary uses. Operating debit cards seldom attracts fees unless you seek an overdraft; ensures you don’t get into unwanted debt unless you’ve to.
Free access to your funds: Debit cards either charge a little withdrawal amount or no fee at all. Most UK bank ATMs are free to withdraw; using their ATMs to withdraw, whether you bank with them or not is virtually free. Where fees are charged you actually have the option of cancelling the transaction. If you want to know your real financial outlook, a debit card is a perfect mirror.
Using a debit card helps you to live within what you can afford and manage your daily financial affairs amicably. However, in case you need extra money for emergency funds you’ve not planned for a debit card can be a disadvantage. Also, since it’s not a credit facility, a debit card will never help your credit rating. Debit cards could be unhelpful in future for those who need to secure mortgages.
Credit cards have their strengths
Credit cards are popular and heavily helpful, but can also be heavily misused.
Access funds instantly: One of the strengths of the credit card is the ability to access instant credit. It’s a hugely popular way of seeking credit all over the world offering instant funds to deal with daily expenses and cater for unforeseen emergencies.
Extra protection: Credit cards avail some other protections to help you manage funds well. For instance, if you went ahead to purchase an item of between £100-£30,000 and seems to have defects or not as indicated or isn’t shipped you can make a claim for a refund as per the Consumer Credit Act of 1974 Section 75. This lets you rest easy. Even if the seller disappears, your money will be safe.
Comes with important rewards: To compel you to use the credit facility in credit cards some of the providers offer lots of rewards. These rewards are redeemable in a wide range of stores in the UK and globally, including air miles to fly around the world with. If you intend to use a credit card, it’s an option to make the most of.
Repayment without charges: Some credit cards are notorious for high interest rates. However, there’re always interest-free instances, especially on newly provided 0% purchase cards allowing you to spend the amount you need and repay later when you’re ready without incurring heavy interest charges. It’s perfect when you want to purchase an item fast, and you’re ready to repay the money within the agreed period.
Perks with spending: To convince you to spend more, credit cards are rolled up with perks. For instance, some offer cashback if you spent a specific amount of credit in the card while others offer insurance for gadgets, travel opportunities or redeemable items.
Credit rating enhancement: If you want to improve your creditworthiness, a credit card is always a better choice. However, you must always ensure repayments aren’t late, and you miss none. Otherwise, late repayments or no repayments at all could destroy your creditworthiness.
Only go for a credit card to help you purchase things you need daily, cater for emergencies or make one-off purchases if you’re able to commit to repay the funds at the expected, agreed time to avoid getting into serious debt. If you decide rewards cards are better for you, find a credit card with benefits that you will actually use.