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Credit or Debit Card: Which One is Safer To Use

IndianMoney.com Research Team | Posted On Tuesday, December 24,2019, 05:39 PM

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Credit or Debit Card: Which One is Safer To Use

 

 

When it comes to making payments we have two convenient options other than cash – debit card and credit card. However, most users simply use them to make payments without thinking much about their benefits and how they can be used to ease personal finances. Listed below are some instances when users can make the best use of credit card and debit cards:

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Four Instances When You Should Use Your Debit Card:

To Avoid Overspending:

A Debit card is an excellent tool to access money. They can prove to be quite helpful to control shopping spree. Since debit cards are linked to your bank savings account, thus the money available to you is the money you saved for emergencies or investments. Therefore you can limit your expenses and skip extravagance expenses.

Individuals Who Are Not Very Responsible:

Debit cards can prove beneficial for people who are a little irresponsible in managing paperwork. People who simply forget to pay their bills or misplace them can use a debit card to save finance charges in case of delayed payment. Also, you need not pay a joining fee or annual fee on debit cards, unlike a credit card.

See Also: How to Increase Your Credit Card Limit?

Save Interest Cost:

Credit cards charge a high-interest fee when payments are delayed. If you have dealt with such problems or want to avoid such instances then debit cards are an ideal option for you. The Debit card helps you to keep away from such traps and secures your finances.

When You Need Cash:

A Debit card is the best way to withdraw cash from an ATM. Though you can withdraw cash using your credit card as well, it is best if you do not use your credit card for such purposes. Using credit cards to avail cash can lead to huge interest costs as the interest is charged from the moment the cash is dispensed. Additionally, you may also have to pay certain transaction costs as well.

Insufficient Balance in Bank Account:

There are times when we go overboard with our money and spend a little extra. At times when your bank balance is running low, and you do not have access to cash then credit cards are best to pay your bills. Make sure you limit your purchases and do not cross 50% of your credit limit. Also, pay your dues in full before the next billing cycle to avoid finance charges on credit card dues.

See Also: How to Apply for Credit Cards Online?

If You are Sure You Can Pay Off Your Bills:

You can use a credit card if you are a responsible borrower. If you have a good income and you are sure you can pay off your bills without leaving any outstanding balance on your card then you can use a credit card and enjoy the privileges it offers. You can also enjoy introductory offers and an interest-free period based on the date of your purchase. Meanwhile, you can hold your surplus funds for emergencies or use it to invest in liquid funds.

To Build a Good Credit Score:

A Credit score is important when it comes to easing your financial life. You can secure a bank loan easily if you have a good credit score. Moreover, you may also get loans at better terms and lower interest rates if you have a good repayment history. A credit card is the most convenient way to build a repayment history.

Also, the credit utilization ratio is a crucial factor considered by credit rating agencies while computing your credit score. Thus judicious use of credit cards and timely repayment of dues enables you to build a good credit score over time. Thus it can prove to be helpful for future borrowings.

See Also: How To Get Credit Card If You Don't Have a Job

Three Instances When Both Cards are Ok:

To Maintain Details of Expenses:

If you want to maintain the details of your monetary transactions then both debit cards and credit cards can help you do so. Using these tools, you can access detailed records of where and how your money was spent. This can be a good option if you are on a budget. Detailed records of expenses also help you to create a household budget easily.

Earn Reward Points:

Nowadays both credit cards and debit cards come with reward points and offer for usage above a specified limit. You can either accumulate your points or redeem them immediately. Most of the cards give cashback points for shopping at select retail outlets.

In Case You Don’t Want to Carry Cash:

Both credit cards and debit cards are useful in instances where you don’t want to carry cash but require a considerable sum of money. For example, in case of hospitalization or travel to a foreign destination, you may require carrying money with you, but carrying cash may not be a safe option. Thus both these tools can be used in such instances.

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