What Makes a Credit Card Different From a Debit Card?
Credit and debit cards are used to avail of services and goods without paying in cash or using a cheque. The difference between a credit card and a debit card is where the cash comes from to pay for the purchases. A debit card pays for the purchase using funds from your savings account. A credit card pays using a line of credit, which means you pay the amount later and hence have more time to settle the bill.
There is a difference between credit cards and debit cards and how people use them. Sometimes, it can be confusing to decide which card to use for which payment. Mostly, you can use a debit card to pay for day-to-day expenses so you can track your savings account amount in real-time. For big items like a vacation or car, you can pay using a credit card to accrue money and pay eventually.
Benefits of using credit cards
There are many advantages to owning a credit card.
- Credit History- You can build your score using your credit card. The main difference between credit cards and debit cards is that credit cards can help you improve your credit score. You can build your credit history every time you timely settle your credit card bills. You need to have a good credit score if you ever wish to buy a house or a car or avail of a loan. When you pay off your credit bill every month, it shows banking institutions that you can pay off debt, enhancing your CIBIL score.
- Extra Time- You can gain extra time to save money and pay for your purchases if you use a credit card. You can shop for the entire month and then pay it all off at the end of the month when your credit statement arrives. Usually, you will have 3-4 weeks to pay off the things you may have bought using your credit card. You can also only pay the minimum amount each month until you can afford to settle all your debt. However, there is a maximum credit card limit in India. Therefore, if you spend more every month and only pay the minimum amount, you may enter a debt trap and exhaust your maximum limit.
- Better During Emergencies – If there is an emergency, a credit card will be convenient and useful. If you do not have enough money in your account and yet need to repair your house or pay for an unexpected expense, then you can pay using your card. Credit cards are like pre-approved loans, you have a credit limit, and you can spend as much as you want. Credit cards also offer rewards such as the Bajaj Finserv RBL Bank credit card, which offers free BookMyShow movie tickets and airport lounge access to all its cardholders.
You can apply for a card online at Bajaj Finserv. If you want to check your eligibility, you can do so at Bajaj Finserv’s website. They offer over 17 credit cards to match your needs and lifestyle. There are different cards, such as cards for people who like to shop, cards specifically to buy fuel, or travel cards to gain flight tickets and movie offers. There is a credit card for everyone out there.
There is a difference between a credit card and a debit card, and you should understand that to determine whether you want a debit card or a credit card. Credit cards can be used to convert purchases into EMI transactions, cashback, rewards, and more.
Debit cards help you avoid debt, but credit cards are good for emergencies. If you spend too much money, then get a debit card; however, if you make many online transactions, it is better to use a credit card.