Updated: Sep 19
In today's fast-paced world, plastic cards have become a vital part of our daily lives. We use them to pay for groceries, bills, and a variety of other expenses. With so many options available, choosing the right card can be confusing. This is especially true in the UK, where there are two main types of cards: debit cards and credit cards. Understanding the differences between the two is crucial to ensure you choose the right card for your financial needs.
Learn more by watching the video and reading the blog post below:
Debit cards are linked to your current account, and the money spent using the card is directly deducted from your account balance. In other words, you can only spend what you have in your account. Debit cards are ideal for people who want to keep control of their spending and avoid debt. They are also a good option for people who don’t want to pay interest on their purchases.
Credit cards, on the other hand, allow you to borrow money from the issuer, up to a predetermined limit. This means you can spend more than you have in your account, as long as you pay back the amount borrowed within a specified timeframe. Credit cards are ideal for people who want to spread the cost of large purchases or for those who want to earn rewards for their spending. However, if you don’t pay back the amount borrowed on time, you will incur interest and potentially damage your credit score.
Rewards and Benefits
Debit cards generally don’t come with rewards or benefits, as they are designed for basic spending needs. On the other hand, credit cards often come with a range of rewards and benefits, such as cashback, air miles, and discounts on purchases. However, it is important to note that these rewards often come with higher fees and interest rates, so it is essential to weigh up the benefits against the costs.
Both debit and credit cards come with fraud protection, but the level of protection offered can vary between issuers. Debit cards may offer more limited protection, as the money is taken directly from your account. If your card is lost or stolen, and unauthorised transactions are made, it may take longer to get the money back. Credit cards, on the other hand, offer a higher level of protection, as you are not liable for any fraudulent transactions.
In conclusion, choosing between a debit card and a credit card depends on your individual financial needs and habits. Debit cards are a good option for people who want to control their spending and avoid debt, while credit cards are ideal for those who want to earn rewards and benefits for their spending. Ultimately, the choice between the two will come down to your personal preferences and financial goals.