Hi, I'm Niharika Bhardwaj a B.A graduate in English from University of Calcutta. I write articles and blogs.
"One of my writings are on the topic Why should I use a credit card instead of debit card?"
Why Should I Use a Credit Card Instead of a Debit Card?
There are several methods of payment that are accepted by sellers both online and offline. Besides the digital payment avenues, credit and debit cards still remain as two of the most prevalent ways of secure payment. However, not many people are aware about how to effectively utilise the two cards.
You occasionally pay with cash, or a credit/debit card. Ever pause to consider the reasons why? The debit card may be the card of your choosing at the beginning of the month when your pockets are full. And as the month comes to an end, perhaps using your credit card will become your favourite method of payment.
But did you know that compared to using debit cards, using credit cards from the start will enable you to reduce your spending more? Debit cards, unlike credit cards, also have many advantages, but it is difficult to match the savings you can get with your credit card.
Continue reading to learn why using a credit card is better than using a debit card.
Benefits of Using Credit Card
Some people avoid using credit cards out of concern that they may fall deeply into debt. Given that credit card interest rates are typically high and can build up quickly, this is a genuine concern. Although you should make every effort to prevent credit card debt, you may still benefit from credit cards' many advantages if you use them responsibly.
The benefits of using a credit card are:
● Create a Credit History
Using a credit card responsibly can help you if you want to establish credit or if you want to raise your credit score. Debit cards, on the other hand, aren't listed anywhere in your credit reports, so they can't help you establish or raise your credit score.
Your credit journey can be greatly aided by using credit cards properly, which includes paying your bills on time, keeping a low credit utilisation ratio, and refraining from applying for many cards at once.
Therefore, picking a credit card is always a good idea if your objective is to raise or improve your credit score.
● A Bank Account is not Necessary
Obtaining a credit card is not dependent upon having a bank account with the institution. This is so that you can borrow money and then pay it back using a credit card, which is not connected to your bank account. With credit cards, you may make purchases without cash and then pay them off whenever it's convenient for you.
While a savings or current account is required to use a debit card. Credit cards undoubtedly provide you with the freedom to shop or make purchases whenever it suits you, but to have a respectable credit card, a strong credit score is necessary. People with an excellent credit history often receive credit cards from card issuers.
If you meet the criteria for a credit card and are eligible, you should apply for one to take advantage of the rewards. To preserve a good credit history, keep in mind to use your credit card properly.
● Forex Markup Fee
If you frequently travel overseas, credit cards may be the ideal travelling companion. The bank assesses a forex markup fee on debit and credit cards whenever you make a foreign exchange transaction.
Although debit cards can be used for international transactions, there are credit cards on the market with cheap foreign exchange markup fees. Some credit cards may significantly reduce your travel costs while enjoying exclusive benefits like free access to lounges and hotel membership.
Therefore, selecting a credit card with a low forex markup fee is crucial while travelling abroad since debit cards do not offer the same advantages.
Factors to Consider Before Using a Credit Card
Credit cards are undoubtedly a terrific tool to reduce your spending, but using them carelessly can put you in debt. Therefore, before applying for a credit card, bear the following in mind:
● Don't go over your credit limit. Instead, use it as little as possible to raise your credit score.
● To prevent late payment fees and other interest charges, pay off your credit card balance in whole and on time.
● Avoid using your credit card to withdraw cash because the fees are greater.
● To get the most out of your credit card, always pick one that best fits your lifestyle.
● To select the best credit card for you, you must weigh your options before applying.
● Read the fees, charges, and any pertinent terms and conditions thoroughly.
Conclusion
The only way credit cards genuinely benefit you is if you utilise them sensibly and make your payments on time. If credit card interest starts to accrue on past-due amounts, using a credit card becomes significantly more expensive than using a debit card.
Therefore, there are practical ways to keep track of your spending if you're concerned about charging more than you can afford to pay back on a credit card. To make and maintain spending goals, you can use money management software, a phone note, or even a pen and paper.
It's time to put your debit card aside and start earning rewards once you have confidence in your ability to handle credit cards responsibly.
