Every person faces a dilemma over whether using the debit card is better than the credit card. The need for a credit or debit card to make payments is to avoid the inconvenience of carrying cash. Both kinds of payments have their own pros and cons, so it is important to know about them.
A Debit Card Budgets Your Expenditure
You can apply for a debit card with your bank. A debit card lets you pay for your purchases directly from your account. Your card has a PIN number which you type when you swipe your card. The amount is then directly debited from your account.
Many banks automatically give a debit card when you open an account. The greatest advantage of a debit card is that it keeps your expenses under check. Since you already know how much money you have in your account, you will naturally make purchases which are within the limit of your account. Suppose someone continues to use his debit card even after the account has gone below the required amount, some banks may allow the payment to still be made. This is called an overdraft; the problem with this is that the bank will later charge a high interest on the payment. Some banks also put a limit on the overdraft which indirectly keeps your expenses in check.
The problem with a debit card is that in case someone gets to know your PIN, he can conveniently use it to make purchases. Once you get to know about this, you must immediately inform the bank and block all payments. If some damage is already done, then you will just have to bear the losses.
While using a debit card, you must remember to never ever type the PIN in public and always check your bank statements carefully to ensure that the payments match what you have actually purchased. One must keep in mind that the security in a retail store is not as good as that of a bank so there is always a risk of someone hacking the machine and knowing your PIN number. Still, many people prefer to use their debit card as it keeps their expenses under control.
A Credit Card Is More Secure
A credit card has to be applied for with a bank. It can be the same bank where you hold an account or another bank. In this system, the credit card company will pay for the expenses made via your card and later give you a bill which will include an interest on the amount.
The main disadvantage of a credit card is that it may cause you to spend more than what you can afford. Later, if you cannot pay the bill on time, you will be charged a hefty late fee. Also, due to low finances, you may have the option of paying only a part of it on the due date and the remaining amount in the following month. But in such cases, the interest will keep piling.
The chief reason to avoid using a credit card is that there is no automatic check on your expenses, so you tend to overspend. A credit card contains your signature which is matched with the one that you provide whenever you swipe it. One may feel that the signature can be easily forged but in some ways a credit card is more secure. Once you lose your card, you must immediately inform the company about it so that they can block all further payments.
It is wiser to use a debit card to keep your expenses in check. If you prefer a credit card, keep a track of the amount and pay your bills on time.