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Which is Better Credit Card Or Debit Card?

By Finserv MARKETS - Dec 4,2019
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Which Is Better Credit Card Or Debit Card

Credit cards and debit cards are both equally handy instruments of payment. Both of them eliminate the need to carry cash everywhere. With cards, all you have to do is swipe them and the payment is done. But both of them differ vastly in their operation, the key difference being the source and process of the money deduction whenever a payment is made. It may be prudent to keep a debit card to control your finances, especially expenses and stick to the bank balance. In other cases, credit cards can prove to be a great resource by giving you the opportunity to buy now and pay later by letting you pay the credit card bill once, rather than having to worry about it every time you make a payment. There are additional parameters too: what are the rewards you are receiving? Are their associated perks? Are you able to have significant savings?

Let us look at why credit cards can answer these questions for you and how they are the better option the next time you want to swipe at the POS or at the checkout of an online store.

1. Manage your payments

The first and foremost struggle with a debit card is that you are spending money each time you swipe your card. That depletes the funds you have in your bank account. In times of emergencies, a debit card cannot help with a fund crisis. But in the case of a credit card, there is no actual money being spent here. You have an amorphous credit limit up to which you can spend. You can also choose to consolidate your expenses into installments and choose to pay EMIs instead.

Credit cards can be especially helpful in case of emergency expenses. If you have an expense that needs to be taken care of immediately, just swipe your credit card without worrying whether or not you have funds available immediately. Getting bills at the end of the month helps systematize and itemize your expenses better.

2. Build your creditworthiness

The single most important function of a credit card is that it helps you build up a credit history. Why is credit history important? Your credit history determines your credit score. It becomes an important parameter to judge your creditworthiness, that is whether you will be able to honour your credit commitments. If you are planning to borrow money in the future, a credit card is a great way to establish a good record. If you are regular and timely with your payments and do not exceed your monthly credit limit, your credit score will get a boost. Your credit history with your credit card payments can be a testimony to your financial discipline. Any future loan application will likely be treated favourably.

3. Avail rewards points and bonuses

Credit cards come loaded with perks, reward point systems and bonuses for the cardholder. These perks can be air miles, discounts, exclusive vouchers, hotel stays, movie vouchers, etc. Consider the Bajaj Finserv RBL Bank SuperCard, for instance. It gives you up to 20,000 reward points as a welcome gift alone. Also, there is a systematic accumulation of 20 points for every Rs. 100 you spend by swiping the card. Redemption is possible against products of partner stores and service providers across flights, hotels etc.

4. Safeguard against fraud

In the case of debit cards, you are spending actual funds present in your account. So in the unfortunate case that there is a fraudulent transaction, you lose your money. If your credit card gets lost or is misused, you do not end up spending that money. Instead, you can report the fraud to the issuer who can then reverse the transaction immediately. By nature of how they operate, credit cards offer protection against fraud.

5. Interest-free credit and cash advances

The Bajaj Finserv RBL Bank SuperCard available on Finserv MARKETS does more than just letting you redeem your cashback offers and reward points. It also allows you to convert your credit card limit into an interest-free loan for up to 90 days. This amount can be considered just like any other short-term loan, which has to be repaid in 3 EMIs. The SuperCard also allows you to avail interest-free cash advance for a period of 50 days.

Credit cards can help you manage your finances much better and hone your financial skills better and faster. They’re a must-have instrument of payment – you save money, reap rewards, get exclusive benefits. Making payments never looked this convenient and lucrative!

“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we works towards fulfilling all your personal and financial needs . What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522