People believe in a very common myth that credit card and debit card are same. However, this is not at all true.In fact, debit credit and credit card is completely different from each other. The possession of credit card is identical to that of a debit card. Apart from that in both cards there is a secret in number, the holder of the cards needs to sign at the back of it. All these are the basic reasons behind the myths people have about the debit card and credit card.
As already said, if we see from the functional perspective credit card and debit card are completely different from each other. Both cards are offered by the bank but the basic and the main difference between the credit card and debit card is in case of credit cards we borrow from the bank. The money we spend through credit cards is not deducted from our account but from the bank’s account and so, the banks at the end of every month ask for the amount we have borrowed from them. If we fail to pay back the entire amount we owe on time the banks charge a certain rate of interest on the credit cards. In fact at times if you get too late to pay what you owe they often charge high penalty. But in case of debit card the money we use gets deducted form our account and so we do not need to pay any extra charge as rate of interest for using debit cards.
There are certain advantages of debit cards for which debt card outweighs credit cards and most of the times people are suggested to use a debit card. Actually in case of debit card as we need to pay from our account the expense become limited if we suffer from short of cash but in case of credit card out of money situation hardly arise and we can spend almost at fullest. But the biggest hitch arises with credit card when it comes to pay back and we fail to do that. It raises your debt burden and your credit score starts to fall and sometimes it lead to bankruptcy as well. But having a debit card there you will be paying according to your affordability and so there is no chance of debt burden.
But on the other hand if we see credit card is more helpful than a debit card in times of emergency. Actually credit cards are one of the best options to be used in emergency purpose as you can get money at any time you want. You can swipe the card from anywhere. But if you are short in cash then debit may not rescue you from any financially difficult situation.
Hence there are a number of facts that prove the differences between the credit card and the debit cards. You need to know the right facts that will help you to choose the one relevant for you according to you financial situation and need.
If you want to get more information about finance short term, check us out at NobleFunding.com.au.