Debit cards are designed to keep your own money and use it at your discretion. It is fairly common practice to transfer certain amounts of money to these cards, such as wages, pensions or scholarships. As a rule, the production and use of these cards does not require payment, that is, the bank does not charge a fee for these operations.
You can use debit cards not only to keep cash while accumulating interest but also to pay at any points of sale, like stores, pharmacies, entertainment venues, restaurants, etc. In this case the commission for these actions is not charged, and sometimes even accumulate bonuses that can be used for future purchases.
You can often withdraw cash from an ATM at a minimal interest rate or without interest.
Although debit cards are mostly used to store your own money, sometimes bank customers can take advantage of a special offer: to get an amount greater than the balance on the card. This procedure is called an overdraft, in which a person can spend more than he or she currently has and then return the borrowed funds within a certain period of time. Debit cards with overdraft are mostly issued for transferring fixed amounts to them, as banks try to insure themselves against the risk of not receiving the issued funds in excess of their card balance.
As opposed to debit cards, credit cards are issued to clients as borrowed funds, which, like a normal loan, have certain conditions:
– repayment and urgency, in which the money must be returned in full within a certain period of time;
– Chargeability, which is based on the fact that it is necessary to pay a certain fee to the credit institution for the use of bank funds.
The good thing about using a credit card is that you can borrow only a small amount of money, about $100-200, with no need to explain how much money you will be spending. If the card has a grace period, you can pay the money back during the grace period (usually about 50 days) and not pay any percent on the loan.
But to get a credit card, many banks require you to present a certificate of income, according to which the limit of the borrowed funds will be calculated. In many cases, the client has to pay a fee for making and using the card, which is charged annually.
What to choose?
If you don’t have money problems, you don’t need a credit card. Cards with accrued interest on the balance will help you multiply your funds. But when you regularly don’t have enough money, credit cards can be very helpful. If you use your credit card properly, you can borrow small amounts of money for a short period without paying interest.