a credit card and a debit card

Which is better between a credit card and a debit card? 

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Between a credit card and a debit card, which is better and why, here is a detailed review of both cards.

Debit or credit? How are the two cards different? What are your commissions? this article analyzes the differences between credit and debit cards and tells us which is more convenient in each situation.

We anticipate that both have great advantages.

Debit or credit? That is the question that many Spaniards ask themselves every time they have to pay for a purchase and open their wallet in search of a card.

Which is better to pay for purchases? The truth is that both debit and credit cards are useful for day-to-day life, as long as we know their particularities and their risks.

What is the difference between credit and debit cards?

Debit cards are connected to a checking account and only allow you to spend the money that the cardholder has in their account. Once the balance of the account reaches zero, it will not be possible to continue playing with the plastic.

They are the most popular cards in the US; there are million in circulation.

The credit ones, on the other hand, are not linked to the money that the client has, but to a line of credit. Every time the cardholder pays for a purchase with it or withdraws money, the drawn balance is deducted from the line of credit, while the balance of the account remains intact. 

But that money that is used every time the card is passed through a POS belongs to the bank and, logically, it will have to be returned later. In other words, when a credit card is used, a debt is acquired, since money from the bank is available.

The balance drawn down during each period, for example from the 20th of one month to the 19th of the next, can be repaid at the end of the month or at the beginning of the next all at once, without interest. Or it can be paid in monthly installments, paying a percentage of the outstanding capital or a fixed fee. In these cases, interest will have to be paid, which, on average, is usually 18%.

Debit cards are very easy to get and you don’t even need to have the income to hire them. However, to apply for credit, the client must be solvent and, probably, have to pay a salary at the bank

The risk analysis department must give the go-ahead after analyzing its solvency.
This will assign you a credit limit, which can be increased or decreased over time.

How is a credit card and a debit card different?

In recent years, credit or debit cards without numbers have become very popular.

When should you use a debit card?

Debit cards are ideal for day-to-day use since they allow you to maintain greater control of the money you spend and do not charge interest. 

In addition, it is also convenient to use them when withdrawing money from the ATM, since the bank does not usually charge commissions if the operation is executed in one of its terminals or in those of another entity with which it has an agreement.

Instead, you usually have to pay a commission if you withdraw money with a credit card, even if it is done at the bank’s own ATMs.
However, in recent years mixed credit cards have emerged that allow you to withdraw money on debit without paying commissions.

And when should you use a credit card?

Credit cards can also be used to pay for day-to-day purchases as long as all the money spent is paid back at the end of the month without interest.
This practice, which can be very comfortable for many consumers, forces the client to have greater control over their finances.

On the other hand, you should never pay for supermarket purchases or other recurring expenses (gasoline, household bills, etc.) in installments, since interest will have to be paid.
On the other hand, 
deferred payment can be used to meet unforeseen expenses or large outlays, such as the purchase of a computer or the payment of dental treatment.

In any case, since it is an expensive product, it is not advisable to finance too high amounts, for example, more than a thousand euros. 

In those cases, it is more appropriate to request a personal loan or a pre-granted one, whose interest rate is lower. If a credit card is used to pay in installments, the ideal is to return the money as soon as possible, since this will generate less interest.

Difference between a credit card and a debit card

 

Let’s take an example. If we finance the purchase of a thousand euros computer with a credit card and assume that it has an interest of 18%, if we return the money in six months, we will pay only 53 euros in interest. On the other hand, if we choose to return the money in a year and a half, the monthly fee will be much lower, but the extra cost will be 148 euros.

Even if you don’t usually use a credit card, it doesn’t hurt to carry one in your wallet. Why?
They are more widely accepted than debit cards in car rental establishments, hotels, etc.
Most banks allow you to temporarily turn them off through their apps, so they can be blocked while not in use to gain security.

On the other hand, credit cards usually incorporate free accident insurance and travel assistance, so they can be a suitable product to pay for plane tickets for a trip.

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