Debit Card or Credit Card? Which One is Better? CompareKing.ph

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We all know what a credit card is but few Filipinos know there is another type of card called debit card. http://www.compareking.ph/credit-cards/debit-card-credit-card-one-better-compareking-ph/

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Debit Card or Credit Card? Which One is Better? CompareKing.ph

  1. 1. Debit Card or Credit Card? Which One is Better? CompareKing.ph
  2. 2. Debit Card or Credit Card? Which One is Better? We all know what a credit card is but few Filipinos know there is another type of card called debit card. According to Investopedia, a debit card is “an electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services. This removes the need for bank clients to go to the bank to remove cash from their account as they can now just go to an ATM or pay electronically at merchant locations. This type of card, as a form of payment, also removes the need for checks as the debit card immediately transfers money from the client’s account to the business account.”
  3. 3. Credit cards are “issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual’s credit rating.” From these definitions we can clearly see the difference but there are also pros and cons of each card which we will discuss.
  4. 4. Credit Card Advantage – the main advantage of a credit card is you can use it even without cash on your account. It is similar to loans and payment can be made on a monthly basis. If payment is made on or before the due date, a credit card loan is considered as interest free loan. The credit card provider also gives out rewards in the form of points convertible to cashback or mile points for travel. Discounts at participating merchants can also be availed.
  5. 5. Disadvantage – interest and other charges are the prime drawbacks of a credit card. Improper use of credit card can put a card holder in huge debt due mainly due to failure to pay on the due date or even paying the minimum allowed, resulting in interest and additional fees. Payment of annual fees, although can be waived is also a big disadvantage of a credit card particularly premium credit cards.
  6. 6. Debit Card Advantage - interest free is what a debit card gives to a card holder. The money spent is drawn from one’s account thus expenditure is controlled. There are no annual fee, interest charge and late payment fee because there is no monthly bill. Disadvantage – rewards are limited in a debit card and using it for purchasing airline tickets will not earn mile points. Fees are deducted from one’s account when debit card is used via ATM.
  7. 7. Conclusion Whether you are using a debit card or a credit card or planning to have either one, it all comes down on the purpose and frequency of usage and financial capability. Both can be used to purchase and payments but each has its own advantage and disadvantages. Study which card fits your needs and lifestyle and decide which one will gives the outmost advantage.
  8. 8. CompareKing PH News/Blogs “http://www.compareking.ph/creditcards/debit-card-credit-card-one-better-compareking-ph/”. Debit Card or Credit Card? Which One is Better? CompareKing.ph. January 1, 2014. CompareKing PH.

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