When given the choice between a debit card and credit card, which one should you choose? To answer this question well, you need to be clear about the differences between each card. In this article, let's discuss the features of both debit and credit cards along with their advantages and disadvantages: The Difference Between Debit Cards and Credit Cards Most people are aware of how credit cards are used. When you purchase an item, you charge it to your credit card and pay it at a later time. Purchases made in one cycle appear on the next cycles bill. If you fail to pay your balance in full, you can carry it over for the next payment period but you'll be charged with additional interest rate fees on your account. What about debit cards? They can also be used to make payments when you shop in a store or when you purchase online. Nevertheless, in order to use your card for charges, you need to have enough funds in your account. In other words, the payments you'll be charging to your debit card must be deposited in advance to your account. There's no need to pay for them at a later time. Both debit cards and credit cards can be used to shop or make payments without cash. Some credit cards today function as debit cards at the same time. In this case, the card holder can choose whether he want to access his debit account or place charges on his credit account. Advantages and Disadvantages Obviously, an advantage of credit cards is that you can charge a purchase even if you don't have cash at the moment. With a prepaid debit card, you need to have money in your account to pay for the item. However, debit cards have an advantage over credit cards. For instance, debit cards can be used for transferring money to friends or family wherever they are in the world. This can save you significantly on the cost of wire transfer or remittance fees. Debit cards can help you stick to a budget plan and some cards even help you build or rebuild your credit Business owners who hire freelancers or homebased workers can use debit cards to send their pay. Debit cards are a convenient way to shop more safely since you don't need to bring cash. On the other hand, credit cards that function as debit cards must be used with caution. When you use credit cards to take out a cash advance, you immediately incur the interest rate on your account. While with a debit card there is no interest rate. Which one should you get? So which one should you get? The functions and features that each card provides will depend on your needs and lifestyle. If you want to get both cards, you can use each one on different circumstances. The important thing to remember is whether you own a credit card or a debit card is to be aware of your spending and your obligations to pay. Copyright (c) 2009 Tara Tiemann
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