From time to time you will have faced the eternal question: do you use a credit or debit card? And it is possible that, at that moment, unless you had both concepts well defined, you did not know how to answer correctly, or you said that you use a card, and that you do not know for sure which one it is.
Therefore, today we are going to talk to you, not only to know the concept of each of the cards, but of the difference between a credit card and a debit card. Thus, you will never have that problem again.
What is a credit card
A credit card can be defined as that instrument that issues a bank to carry out operations, either with an ATM, or to make purchases of goods and services on credit.
What is a debit card
A debit card is a material tool that issued by a bank and that allows you to make purchases of goods and / or services on debit, or money operations at an ATM.
The differences between credit card and debit card
Although both cards, in many cases, are not distinguished from each other, the truth is that there are really certain differences that should be known, especially to finally opt for one financial product or another.
Thus, the main ones are the following:
Ownership of money
Do you think that the credit card and the debit card, by going in your name, means that the money is yours? The truth is that not exactly. On a credit card, the money is not yours, but the bank's. That amount you have is a line of credit that your bank deducts as you spend but that, later, you are obliged to return it.
In debit cards, these are linked to your checking account, that is, to your bank account, so the money you are spending is yours. Therefore, there is no money limit on a debit card (well, the one you have in your account, of course). Meanwhile, on the credit card there may be a limit of money that they "lend" you, which can be 2.000, 4.000 or more.
In conclusion, in a credit card the money belongs to the bank, while in a debit card it is yours.
Payment Methods
It is perhaps another of the great differences that exist between both cards, because they also differ a lot from each other. For example, in the debit card, any purchase you make with it will be reflected practically immediately in your checking account, and will be deducted.
However In the case of the credit card, the term to return that money that you have spent does not have to be immediate; normally there is a term, or it is charged after a month from the checking account. Everything will depend on what the contract you sign stipulates. There are times when the total of what you have used it is paid at the end of the month, which is charged the following month, or can even be charged according to a fee.
In short, the debit card removes the money from your bank account immediately. The credit card postpones that debt for a while for you to pay it off.
Credit card and debit card limits
Did you know that cards have limits? That is to say, beyond that "maximum", they will be of no use to you because they will not be of any use to you. To do this, you must take into account the following:
A debit card is limited to the amount you have in your bank account. That is, if you have 1.000 euros, no matter how much you want something worth 1.001, you will not be able to buy it because you will lack that euro (and the bank will not lend it to you).
On the other hand, the credit card if you are going to find that it has a maximum limit, a figure that your own bank will have established. This amount is what the bank "lends" you, since, as you have seen before, the money on this card is not yours, but the bank's, and the bank does not have unlimited credit for you. And what limit is the one they put? Well, it all depends on your ability to return that money.
As many times the refund is made for the current account charge, they take as a reference the balance you have in your account and, based on that, they calculate the ability to recover your money.
To take money out
Another difference between a credit and debit card is the fact of withdrawing money. On the one hand, on the debit card, when withdrawing from an ATM, or from a bank, it does not imply that you have a cost (because you are taking out of your money). On the other hand, in the case of credit cards, things change, because here you do have to pay commissions for taking out with that card. And sometimes those commissions can be quite high, so keep that in mind.
Other differences
In addition to the ones we have seen, which would roughly be the most important, there are other types of differences. For example:
- Safety. In the debit card there is usually no insurance, you can only block or cancel; while, in credit, due to the fact that it is the bank's money, you do have anti-theft insurance.
- The hiring. With a debit card, you may not have to meet many requirements; However, a payroll, pension or similar is essential in a credit one.
- Discounts Because in some establishments, shops, gas stations ... there may be benefits of paying with debit cards (instead of credit or cash).
Which is better, a credit card or a debit card?
Now that you know the concept of both cards, as well as the main differences, which one is considered the best? You have to know that there really is not one better than another. Both are good but cater to different needs. Thus, it is the person who must decide which of the two is the most appropriate for their lifestyle.
Experts point out that, when there are big purchases, or you need to buy something that, in principle, you cannot pay because you do not have a balance in the account, it may be correct have a credit card instead of a debit card, designed to make withdrawals at ATMs, small payments, or you have enough money to pay properly for what you want to buy.
Many come to have both types of cards, and use them interchangeably according to their needs. The truth is that there is no better or worse unless the conditions in which the bank offers them harm you in some way (interest, maintenance ...). In that case, you would have to decide on one to overpay.
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