A Debit card is an easy way to go. Whenever you are making a purchase through a debit card, you are actually using the money from your bank account associated with the card. This is not the case with Credit cards, with credit cards on the other hand if used; you will be using the credit card lender’s money which you will need to pay later. The payment terms are laid by the credit card companies, which one should adhere. In many articles, we read that credit cards causes a lot of problem and are a dangerous financial product to use. But is it so? A debit card can prevent you going into unwanted debts which a credit card can cause.
If a credit card is used wisely, you can achieve a financial harmony in no time. Many of us do not understand the technicality of using a card and simply overspend the limit, which later turns into a nightmare. If used responsibly the card can be your friend in a number of ways as compared to a debit card.
Let us just understand the five different ways which make a credit card better than any other card,
- Use the limit
As compared to a debit card, a credit card comes with a spending limit. The spending limit is determined by the card lender considering your employment and your incomes. You can use the credit limit for your monthly spends with 0% interest for 30-45 days, depending on what the repayment terms are. You can use this money of the lender free of cost for a certain time and can later make the payment. If by any chance you fail to make the payment on time, a heavy interest will be applied on the amount due and it will also hamper your credit score. Try paying your entire bill, instead of minimum balance to dodge interest charges.
- Reward points and offers
This is one of the best reasons which make the card more beneficial than a debit card. When you make payments from your card, not only you get a float period to make the repayment, but also you get reward points. The reward points are subject to the card lender and different card lenders have different reward points to offer. For example, some card lenders will give cash back offers on specific purchases and on the other hand some other lenders would only provide you with payback points which you can redeem for a gift or so.
- Fraud protection
If you hold a credit card and you encounter a fraudulent case on your card, the lender will take care of the rest. In simple terms the fraudulent terms are better for credit cards rather than a debit card. If your card gets stolen and someone made a purchase on the same, the lender will not charge you for the theft purchase. Instead the lender will block your card and will also offer you better card deals. In cases with debit cards you will have to wait till the bank solves the disputes.
- Extra charges
If you have a dispute on your credit card statement and the lender has imposed an unwanted charge on you, you have the power to negotiate with the lender. As compared to a debit card, the charges are already withdrawn from your account, so you don’t have leverage in such cases. If your dispute is genuine and the card lender sees it that way, you may never have to pay such charges. Sometimes you are charged with limit overdraft charges if you have crossed the spending limit, in such cases you can negotiate with the lender and dodge such charges.
- Extra perks
A credit card holder is a king. The card lenders come up with different schemes and offers to attract card customers and if your credit score is good, you can be the king and have an upper hand in card negotiations. You can decide on your credit limit, and many such other benefits associated with a card. In some cases, the lender also provides you a free accidental insurance with the card to pay off your balance at unfortunate circumstances.
It can help you in many ways, but if you drown in the card’s fancy illusions it’s really hard to get back from there. As the wise man said, “use wisely and live well”.
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