Credit Card vs Debit Card which is best?

Many people have both a credit card and a debit card which they use for shopping. It can be hard at times, knowing which one is the best to use and so it is worth understanding a bit more about them before you choose.

A debit card payments moves the money form your bank account to that of the place you are buying from quickly. It can happen almost straight away or take a few days, depending on the bank and place you buy from. It works very much like a cheque but is faster. A credit card is very different. When you pay for things on this card you will not have to pay for them until you get your monthly bill. This means that you get a period of time when you have the items and have not paid for them, so it is almost like having interest free credit. When you get your bill you can choose whether to pay it all off or whether to pay a minimum amount and leave the rest to pay off later.

Many people will choose a credit card because they do not have the money to pay for the item immediately. They take advantage of the fact that they can delay paying for it all and get what they need without having to wait until they have saved up the money for it. This can be really useful if you are buying things that you really need, such as food or paying bills as long as you pay it back as soon as you can. It will give you a way of being able to pay that bit extra without having to worry about not eating or being cut off. However, if you are buying things that are not necessities then it is worth considering whether you really want to buy them this way. You will end up paying a lot more for them as you will have to pay interest on the money that you have borrowed in order to pay for them. The longer you delay in paying it back, the more expensive the items will effectively be. It is easy to forget about this when you make the purchase, but you need to think hard about it.

If you are buying online, then you may find that it is safer to use a credit card. When you use a credit card you have insurance and so if the item you buy never arrives or has a problem with it, you can make a claim through the credit card provider to get your money back if you cannot negotiate with the seller. This adds protection to your online purchase and can be really worthwhile and some people always choose to use credit cards online for this reason. This protection also applies to offline sales and so for big purchases it can be worthwhile. However, make sure that you look into what cover your specific card gives you, before you rely on it too much.

It is worth taking a look at the charges for using cards too. There are some companies which will charge a fee for using a credit card, but there are not normally fees for using a debit card, although there may be some exceptions to this. Small and independent businesses may charge if you use a credit card for values under a certain amount or they may not allow you to use one for low value purchases at all. Some larger companies may charge a surcharge or fee for using a credit card as well. Usually they will warn you, but always ask if you are unsure.

If you are worried about the temptation to overspend with either of these cards then it may be best not to use either of them. However, a credit card may be more of a temptation for many as the money does not have to be paid back. With a debit card the money will come out of your bank account and so if there is no money there, the payment will not go through. With a credit card, you will have a credit limit and be able to use money up until that limit. This could mean that you will be tempted to spend a lot of money on the card and this will allow you to be able to spend more than you can afford to pay back. It is always wise to pay off the full balance outstanding on the card each month, when it is due in order to avoid being charged interest. However, if you spend more than you can afford to repay, you will not be able to afford to do this. If you think you will be tempted to overspend then it may be wise never to use the card in the first place.

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