Credit cards are among the most popular payment tools we use today. They are comfortable, they allow us to spend money in total safety without the need of bringing much cash with us, plus, they are very fast to use, as paying with a card is an immediate action that doesn’t involve dealing with changes. Credit cards share all these characteristics also with debit cards, still there are of course some differences between the two types of cards. This article is going to highlight how credit cards are different from debit cards and what may be the best choice for you.
Credit cards are a kind of loan
Credit cards are different from debit cards because they allow you to spend money you don’t really own. While debit cards are directly linked with your bank account, so that they allow you to spend only the money you effectively have in your account, credit cards are instead a sort of pocket loan that doesn’t involve usage of your money at the moment of the payment.
With credit cards payments are delayed
Credit cards differ from debit card also because of the way they debt you sll the purchases you make, While with debit cards your money is instantaneously taken from your bank account, with credit cards you accumulate a balance each time you make a purchase: then you are going to clear all the balance at once the next month and generally with no interest. If you are using a revolving credit card, you are instead paying in installments your balance, in this case, with also interests. The main point is that with credit cards you still keep all your money in the bank until it’s the time to clear your credit card balance, while debit cards work more or less like cash, only in a safer and more comfortable way: if you don’t have money, you’re not going to spend them.
Credit cards and debit cards are safe
Credit cards and debit cards are generally very safe payment tools, provided that you pay attention not to share your PIN with other people, type your credit number on suspicious websites (especially if they are not protected with SSL certificate) or physically insert your card into terminals featuring skimmers or other tools that fraudsters may easily apply to payment processors that are not often adequately surveilled (like terminals of automatic fuel stations, publicly accessible also during night and without constant surveillance). In this way, it is always a good practice to pay with contactless technology both with credit cards and debit cards, even better if with Apple Pay or Google Pay.
With this in mind, it is often erroneously believed that credit cards are safer than debit cards because they have more chances to give your money back in case of a fraud. The reality is that, while of course each country may have different regulations, both credit cards and debit cards, especially if tied to famous and reliable circuits like Visa and MasterCard, have security measures against fraud that include the ability to get our money back if we were victim of a scam.
Of course credit cards are still different from debit cards when it comes to the fact you are not spending your money instantaneously, and so this can give you a little more safety in case of scams, but only in terms of budgeting: if a scammer is able to steal your credit card and go on a spending spree, you still retain all your money in the bank and so have all the time to file for anti fraud reports while still not worrying about bills or other things that may need to be paid in the meantime. If your debit card is instead used on a spending spree, while you’ll still be able to file for anti fraud protection, you’ll also need to deal with the fact your bank account has been wiped out and next bills wouldn’t eventually be paid, by putting you in a very difficult situation.
In this way, payment delay offered by credit cards can be an additional safety when it comes to face situations like card clonation, still, even a debit card can be enough safe, if you have set adequate spending limitations that may reduce eventual consequences of a spending spree. The best situation in which you can be safe even with just a debit card is if, in addition to limitations applied on your card, you have also some extra capitals in your bank that can cover you in case of spending sprees that hit your limitations, maybe even better if with an extra overdraft protection, as all these things combined can give you less financial stress while you wait for your money to be returned after anti fraud reporting.
This, in order to summarize that both debit cards and credit cards can be very safe tools to pay and, while credit cards may be a little more safer than debit cards, it is not difficult to reach the same level of safety even with debit cards with some simple strategies.
Credit cards are more expensive than debit cards, but may offer more perks
The final reason why credit cards are different from debit cards is because of its fees. While debit cards may come with zero annual fee and, of course, zero interest rate, credit cards can be a very expensive choice which, in turns, may give you some perks and rewards. If you maximize you returns from rewards so that they are higher than the fees you are going to pay, credit card can be a very good deal, otherwise debit card remains the most convenient way to pay. The risk of making debts, instead, is relative: while credit cards may lead not financially responsible people to making debts on debts, also debit cards can be dangerous the same, as their abuse may lead to less money available for paying bills and other things that, again, if unpaid, may lead to debts.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2022 Alessio Ganci