Credit card vs. Debit card - Which one should you use

Credit card vs. Debit card - Which one should you use







Simply put, a debit card is what you use when you want to spend your own money, whereas, in case of a credit card, you borrow money from a lender to pay for your expenses.






On the surface, credit cards and debit cards may appear to be the same thing - they are just plastic that you use to purchase something. However, nothing could be further from the truth. Before filling a credit card application, you should understand the primary difference between the two and their importance.







Simply put, a debit card is what you use when you want to spend your own money, whereas, in case of a credit card, you borrow money from a lender to pay for your expenses. Since you are borrowing money in the latter case, the lender will charge you interest if you fail to clear your debt in specified time.






Needless to mention, opting for a debit card seems like the smarter thing to do. You don’t have to worry about paying your dues and falling into an endless abyss of debts. However, if things were that simple, credit card companies wouldn’t be thriving. There are a plethora of reasons why you should get a credit card and if used responsibly, it can be an asset instead of a liability.






Building Your Credit


When you go to apply for a personal loan or home loan, the first thing that a lender will look at is your credit history and credit score. If you are fairly new to the world of credit, then it is quite likely that you will not have a credit history. As a result, lenders will be reluctant to sanction your loan because they do not know how apt you are at dealing with credit.






That’s why, credit cards serve as an efficient method of building a good credit history. A credit card is a boon if you use it to make purchases that you can afford to pay for in time. Not only does this boost your credit score, but it also teaches you how to handle credit responsibly.


As long as you clear your dues in a timely manner, lenders will no problem in increasing your credit limit and even approving big loans. This is why more and more millennials are choosing to apply for a credit card.






However, this is not possible with a debit card simply because there is no credit involved there.




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