What Is Right For You, Debit Cards or Credit Cards?


If you were to choose between a debit card and a credit card, which one would you pick? Perhaps you may think that a credit card is always the better choice. However, debit cards can have advantages as well. In this article, let’s talk about the basic differences of debit cards and credit cards so you can better decide which one is best.

The Difference Between Debit Cards and Credit Cards

Credit cards have long been used for making purchases. A credit card gives its holder the privilege to make advanced purchases and pay for them at a later time. Every credit card holder is given a credit line as well as the option to carry over balances from month to month. To avoid the penalty charges, a cardholder only has to submit the minimum due payment on time and pay off the rest of the balance on the next due date.

Debit cards on the other hand are prepaid which means the cardholder can only charge purchases if he/she has available funds in the account. When the funds have been used up, a debit cardholder must make another deposit to be able to re-use the card for purchases. Yes, unlike credit cards, prepaid debit cards don’t provide credit lines.

Both debit cards and credit cards can be used for purchases or payments. Debit card and credit card holders can enjoy the freedom to make payments without the need have cash on hand. Both debit cards and credit cards may contain the Visa or Mastercard logo. Hence both types of cards are recognized by many merchants and establishments worldwide.

Advantages and Disadvantages

A prepaid debit card doesn’t require repayment. After using your debit card for a purchase, there is no need to pay off those charges. They’ve been paid instantly using the funds you’ve deposited.

For some people, not having a credit line can be a disadvantage but if you take a look at it, this limitation can be a benefit. It protects you from the risk of bad debt or debt build up due to uncontrolled spending.

Who can use prepaid debit cards? Small business owners, home based business owners, freelance workers, parents with kids in boarding schools and people with bad credit history can really take advantage of debit cards.

A debit card can be used for sending and receiving cash. In fact, many home based business owners and freelancers use debit cards to do business. If you have kids in college, you can send them monthly allowances through a debit card payment system.

Can Debit Cards Help You Build Credit?

Now that there are issuers of prepaid debit cards that offer credit reporting to the major credit bureaus, they can be used to rebuild your credit score as well. Choose a debit card that will report payments to the bureaus so you can be sure of this service.

Which one should you get?

Both cards can be useful depending on how smartly you use them. Consider your personal needs and weigh the features that each type of card offers. If you want, you can apply for both a credit card and a debit card and use each one for different purposes. The important thing is that you now know how you can use your card to your advantage.


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