Does Managing Your Finances Come Free With Debit And Credit Cards?

The difference between credit and debit card lies in the way you access money and the perks you get. Both look similar and provide you with a quick way to make payments. You can use them both online and offline, and even at ATMs. To choose between them, learn about the critical differences in their features and relate them to your needs. 

What Is A Credit Card?

A credit card is issued by financial companies or banks and allows cardholders like you to borrow money to pay for goods and services. You can borrow only up to a limit that is specified for you based on how creditworthy you are, which is called your credit limit. Interest only applies if you do not pay the bill within the deadline. 

How Do Credit Cards Work?

Such cards give you access to credit and expect you to use it as per your needs and pay it back at the end of the billing cycle. They come with certain charges, like a joining fee and an annual maintenance fee. 

When you clear your full bill as per the statement you receive, you do not need to pay any interest. If you do not pay the total bill but only the minimum amount due, you will need to pay interest on the balance. In this case, you can avoid the late payment fee. Interest rates on credit cards are high, so not planning timely payments or spending recklessly can hurt your finances in the long run. 

Credit cards are very popular as they offer a range of perks, including:

• Rewards points on certain types of transactions 
• Cashback on certain types of transactions
• Discounts or offers on shopping with certain partners 
• Dining and travel-related offers like complimentary access to airport lounges 
• Insurance covers lost luggage or personal accident
• Concierge services 
• EMI conversion facility 
• Cash withdrawal facility 

Managing your finances is key to using a credit card smartly. You can do so by following these steps.

• Tracking and reviewing your transactions
• Establishing monthly spending limits
• Setting up budget alerts to control impulsive shopping
• Choosing autopay to avoid missing payment due dates
• Changing the billing cycle to suit your needs 
• Understanding all charges and fees 

Merits of Using Credit Cards

Such cards increase your buying power and can give you more safety as you transact. Check out the benefits of using credit cards:

• Help you buy now and repay the amount later 
• Aid you in boosting your credit score with smart usage 
• Give you multiple options to pay big-ticket expenses, like in EMIs 
• Offers more safety by reversing fraudulent transactions 
• Allow you access to funds in an emergency 
• Unlock a host of rewards and offers 

Demerits of Using Credit Cards

While credit cards have a lot of appeal, misusing them or swiping without paying attention can cause financial strain. Here’s why:

• High interest charges can lead to a debt trap that is hard to get out of 
• Irresponsible use leads to poor credit score and unhealthy credit history
• Cash advances and balance transfer facilities come at a cost and with rules that can be hard to understand 
• Rewards redemption can also come at a cost
• Discounts and cashback usually have a monthly cap

What Is A Debit Card? 

A debit card is issued by banks to allow you to transact by directly using the funds from the linked bank account. It requires you to have a bank account before it is issued to you. This way, using a debit card doesn’t affect your credit history. 

How Do Debit Cards Work?

A debit card simply withdraws money from your bank account every time you use it. Such cards help you make transactions from available funds only. In this way, they are straightforward and do not come with a range of fees and charges, unlike credit cards. 

Debit cards may also offer you rewards, but these are limited when compared to credit cards. In fact, this is the difference between credit and debit card that is most well known. 

You can manage your finances using debit cards by following these steps:

• Tracking your transactions and reviewing bank statements regularly
• Setting a budget to avoid falling short 
• Securing your card with a PIN 
• Choosing overdraft protection to prevent declined transactions
• Opting for a debit card with a feasible reward program

Merits of Debit Card Usage

Debit cards come with certain advantages, like:

• You can avoid accumulating debt
• There are no interest charges
• You get quick access to your existing funds 
• You can withdraw instant cash from ATMs
• You can earn rewards/cashback points 

Demerits of Debit Cards 

The intrinsic nature of such cards also inhibits certain financial advantages, like:

• Limited means of fraud protection as your account is directly debited 
• No option to build your credit profile 
• Doesn’t allow you to boost purchasing power 
• Limited access to perks 

In today’s day and age, your wallet may seem incomplete without a debit or credit card. To enjoy a range of benefits and manage your spending hassle-free, choose the One Credit Card. You can track all your transactions, EMIs and rewards on the One Credit Card App. 

The app also lets you budget well and set individual spending limits for different categories. You can also enjoy 5X reward points on your top two spending categories every month, as well as 80+ deals on shopping, utility bills, rent, and more. Apply now to get this stylish metal credit card online.