Comparing credit cards over debit cards and help you understand why credit card scores highly over a debit cards and if you can control impulse purchases, how credit cards is one of the best financial instruments.
Being a fan of credit card and able to manage credit cards quite efficiently, I will compare credit cards over debit cards and help you understand why credit card scores highly over a debit cards and if you can control impulse purchases, how credit cards is one of the best financial instruments.
1. Fees
Credit cards are free but most of the debit cards have issuance fees as well annual fees. All the credit cards are not free but most of the cards are free and if they aren’t free, you have to make some amount of purchase each year to waive off the annual fees where as debit cards costs money every year.
2. Credit Score
Spend on a credit card and pay the amount before the due date and your CIBIL score can jump up but if you use your own money lying in your bank account to make a payment with a debit card, it will not tinker your CIBIL Score by a bit. That’s the part and parcel of the financial life we live in.
So to improve your credit score, you should be using credit cards and not but remember not to overdo it. Using significant percentage of the credit limit offered to you on your credit card can hamper your credit score as well. So spending on the credit card within the credit limit and paying off the dues within the due date is way to enhance your credit score.
3. Interest Free Money
Yes I agree that freely available money is a double edge sword and if are not using it wisely, can be real nightmare but if used wisely, you have free money at your disposal.
When I was salaried, I always liked the payment date to be very near to the salary date aka in the first week of every month but after being an entrepreneur, I prefer the date to be in the middle of the month because that is when I get the money into my bank accounts. On top of that, you pay your credit card bill at the end of the billing cycle, so your money continues to earn you interest in the bank account (though very little) and also serves as amount for the minimum balance at times.
4. Cash
Cash with credit cards is not possible (not literally but should not exercise that option as it is at a very high rate of interest) and so credit card is not a substitute for a debit card. Spend on a credit card where spending with a credit card is most beneficial than any other mode of payment.
5. Forex Payments
Debit cards cannot be used for payments in foreign currency but credit cards can be. Being an online entrepreneur, I make lot of payments in USD for my domains and hosting as well as for people that I hire through Elance. If you need to make payments apart from INR, you will need a credit card.
6. Rewards
As you use more of your credit card for your daily expenses, you can earn more and more rewards like free air miles for frequent fliers or free hotel stays or coupon codes for purchase (one of my favorites) or even a cash back.
7. Bypass PIN
I am not a fan of using my debit or credit card pins in public and in credit cards, I like the idea of bypass the pin to make a payment. Some outlets don’t have the option to bypass the credit card pin but then I prefer paying cash instead of card. You may argue about why should the pin be bypass and though that is a different topic of discussion, the option to bypass credit card pin is because you may have international credit cards which don’t have pins as mandatory like we did not had it few months back.
I am more inclined towards credit cards but what are your views on it? Speak your heart out in comments below.
Credit cards and Debit cards have its own advantages and disadvantages. Both are plastic money and have made our lives much more simpler and easier. When you are having a low cash in your pocket you can anytime swipe this card to purchase anything. But yes when I say swipe credit cards are the masters over the debit cards as they are accepted largely by all the merchandisers. It also gives you rewards in return which you can redeem for your next purchases.
I am too a credit card holder and enjoying its benefits while booking movie tickets or dinning with my family. The only thing which we need to remember is utilization rate should be within the limit. You can also see one more website which gives you a difference between credit card or debit card
https://creditsudhaar.wordpress.com/2015/12/10/which-is-better-credit-card-or-debit-card/
Cant agree more on this Shabbir. You listed out the hidden benefits of the credit card over debit card. Even I am using credit cards since long and have got various benefits from different brands. The point is to use them smartly and securely as you had explained in one of your old post.
Yes being smart always helps.
Yes being smart always helps.
I also handle 4 credit cards & till now i have not faced any problem.Even I ask my friends to use credit card aptly. It is a wise decision for me to opt & handle credit cards. Because of this ,i do not carry cash all the time.Even it is a way to save the money.
Agree on the benefit of not handling cash Kanupriya
Agree on the benefit of not handling cash Kanupriya
Great!! I am also a big fan of Credit Card. Last 7 years I have been using and never paid interest. Having 2 credit cards with different billing dates and front loading (making big payments immediately after billing date to avail more credit days) are worth mentioning usage and benefits of credit card.
Yes Vijay, I made the the most of the credit limits by ordering a Laptop today which is the billing date of my Citibank credit card. 😀
I have made creditcard.
How creatively i can use in the Bank If i use only creatively on necessities rather than an Impulse Purchase.
Thanks for the great article.
Pankaj Kumar
Glad you liked it Pankaj Kumar.
Hello sir when u r going to release your Technical Analysis ebook i m eager to buy it
Praveen, it is already released but I am not accepting new members but I share new invites each weak. Let me know if you are interested and will share an invite with you as well.
Very useful article. I was wondering how safe it is using credit card in India? This pass word issue is tricky and risky?
Thanks Shabirbhai.
Manek Sangoi (UK)
The pleasure is all mine Manek Sangoi
Very informative Sir! What is the criteria for getting a credit card from a bank?
Income proof Karun. If you are salaried, Salary slip / Form 16 or else your IT return. Still getting a criteria from the issuing bank would be better choice.