Credit cards should not be confused with debit cards. Although there are similarities, debit cards have more limitations than credit cards do.
In this article, let’s discuss the advantages and disadvantages of these two cards.
Advantages and Disadvantages of Credit Cards
A credit card gives its holder the flexibility to charge purchases or expenses on his/her account and pay for them at a later time. Most credit cards provide a grace period of 15-30 days. This period gives the cardholder the chance to pay back charges without incurring the interest rate.
Today, you can find credit cards that offer 0% introductory interest which means you can carry over balances without incurring additional interest. However, take note that this set-up doesn’t last for a long time. Usually, an introductory offer lasts from 3 months to 12 months. Many credit cards also offer reward programs and this gives consumers the chance to earn incentives or bonuses from their spending.
One disadvantage about credit cards is the high interest rate. Failing to pay off your balances would mean paying more because of the interest charges. True, many credit card holders have fallen victim to bad credit because of uncontrolled credit card spending.
Advantages and Disadvantages of Debit Cards
Debit cards are also used in paying for purchases without bringing cash. However, you can only charge the amount that is available in your account. Once you’ve used up your funds, you won’t be able to use your debit card for charges. You’ll need to deposit funds in your account to start using it again. Unlike credit cards, debit cards do not give you the “charge today-pay later” option.
Debit cards can also be used to transfer money to a friend or a relative who lives in another state or region. You can deposit cash through your bank or ATM and have it sent over to the recipient’s debit account. Once received, the debit card holder can use the funds or withdraw cash using his debit card.
Many people prefer credit cards over debit cards. Aside from the limitations, there are debit cards that charge expensive fees for each transaction. Add to this, most debit card issuers do not report to the credit bureaus so you can’t use them for building credit history. Still, a debit card poses less risk for people who find it hard to control their spending.