Credit or debit? Who pays your card purchases is tired of hearing this question. While making the choice seems simple, deciding between the two forms of payment involves some issues, which should be carefully considered to avoid compromising the budget.
To help you, we have prepared this content that explains the difference between credit and debit, pointing out in which situations each option is most advantageous and why it is important to make the choice with awareness. Good reading
What is the difference between credit or debit?
You may already be tired of knowing, but it costs nothing to remember the mechanism of operation of credit and debit cards.
On debit, the customer makes the payment as if they were making a direct bank transfer to the merchant. The money goes out of your account immediately and goes to the shopkeeper’s account. Debit cards do not charge fees for their use. On the other hand, they do not allow the accumulation of miles or the installation of purchases.
In credit, purchases can be made up to a pre-set limit by the card-issuing bank and are accrued on a monthly invoice. Typically, an annuity is charged and there are loyalty programs that allow you to exchange your accumulated points for goods and services.
When to use credit?
If used responsibly, the credit card is a good ally for those who want to plan their monthly finances. By concentrating expenses on it, it’s easier to pay for everything that was spent over the month on the invoice due date.
Credit is also a good option when it comes to installments of larger amounts. In addition, the accumulated points can be interesting and result in good exchanges.
However, this payment option quickly becomes a trap if used without control. Therefore, spending must be kept in line with expected income in the coming months and not based on the bank’s limit – which is often greater than the consumer’s ability to pay.
Credit card interest accrues on overdue or unpaid invoices. They are among the highest in the market, with rates of around 274% per year.
When to use debt?
Those who need to keep their spending under control should always opt for the debit card, as it allows purchases only according to the available cash. This way, it is as if payments are being made in cash.
Debt also provides security for those who don’t want to carry cash in their wallets or purse. In case of loss or theft, simply lock the card to avoid injury. Finally, debit cards are more widely accepted in commerce and with some conversation, you can negotiate a discount on payments made through certain merchants.
Whether it’s credit or debit card, it’s important that any purchase is made with awareness, right? In both options the money will come out of your pocket. Therefore, every penny must be valued and spent according to careful financial planning.
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