Both credit cards and debit cards are beneficial financial tools. However, both cards have their pros and cons. There can be a situation where both of them can be used. For example, consider someone shopping at a mart. Usually, marts use POS machines for collecting payments via credit and debit cards. At the billing counter, the customer has the choice to use the credit card or the debit card. But how to determine the ideal time for using a debit/credit card? Before applying for the best credit card in India, know its features. Read on to learn more about debit and credit cards and the right time to use them.
Let us discuss the ideal time to use a debit/credit card and its pros and cons.
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Credit cards
Credit card providers/issuers offer a line of credit to individuals. Based on the credit score and history of the customer, a credit card is offered. The credit card comes with a pre-approved limit for the customer. Within the available credit limit, the cardholder can make purchases. A credit card can be swiped at stores via POS machines or used for online payments. However, the credit limit spent is returned to the issuer at the end of the billing cycle.
The billing cycle for a credit card can range between 28 to 31 days. At the end of the billing cycle, the issuer sends credit statements to all customers. The statement has records of all the transactions, purchases, and swipes. In case of a discrepancy in the credit statement, the customer can raise a query. After the statement has been issued, customers have a grace period to pay the bill. Within the grace period, no interest fee is applied to the total bill. After the grace period, interest fees and penalty charges are added.
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Credit card customers have two options while paying off the bill. They can choose to pay off the complete credit card bill. By completing payment, they will clear all the credit card charges. The credit limit will be fully increased after clearing bills. Credit card customers can also choose to pay off the minimum due amount. By paying the minimum amount, the credit score might not take a dip. A credit card can act as a personal loan provider, but only when all payments are made timely.
Understanding the positives and negatives of a credit card
The positives of a credit card in India are:
- Using credit cards and making timely payments builds good credit history.
- Many credit cards offer rewards, travel miles, lounge access, cashback, and other benefits for purchases and transactions.
- Credit cards are more secure than other financial facilities. Even if the credit card is stolen, the thief cannot make transactions without knowing the authentication code. Also, credit card issuers offer fraud protection to their customers.
- By using credit cards, people can augment their credit scores. A healthy credit score will open doors to easy loans and other financial facilities in the future.
- Many issuers offer a credit card apply online facility. By filling in a few details and submitting some documents, one can apply for a credit card.
Some negatives of a credit card in India are:
- Irresponsible usage of a credit card can lead to a hefty debt.
- After non-payment of credit card bills, the cardholder can be penalised.
- Credit cards can augment the habit of unresponsible spending.
Debit cards
Similar to a credit card, a debit card is a plastic card with a magnetic strip. However, the debit card gives access to the funds stored in a bank account. The debit card is offered by banks because it is directly linked with the bank account. Funds are deducted from the linked bank account whenever the debit card is swiped or used for online payment. The debit card cannot be used if there are no funds in the bank account. There is no emergency line of credit for debit card users. However, some banks offer overdraft facilities to users, thus offering an emergency line of credit.
The positives of using a debit card in India are:
- Debit cards can be used to withdraw cash at will.
- Debit card expenses have nothing to do with the credit score.
- Debit cards disapprove unresponsible spending, as you cannot go beyond the amount available in the bank account.
The negatives of using a debit card in India are:
- Debit cards are less secure than credit cards in India.
- Debit cards do not help in boosting the credit score.
Which care to use?
For choosing between credit and debit cards for payments, you look at the item cost and budget. When running out of funds, credit cards can be helpful. Using credit cards also enriches the credit history. Search credit card apply online now!