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  • Category: Miscellaneous

    Debit card V/s Credit Card - benefits and disadvantages


    Ever wondered why it is more advantageous to use a debit card rather than a credit card or vice-versa? Share your thoughts and views.

    Out of the two cards - Debit and Credit cards - which one of them is the most beneficial and why? According to its usage and the several facilities provided by these cards which one among the two is much better for every individual and how? Which card would you prefer to use out of the two and why?

    Please share your views on it.
  • #593720
    From my understanding what I feel that debit cards are those convenient arrangement and way of making cashless payments as these cards are generally issued by the banks in which we hold the account and have balance in it. On the other hand credit cards are those which are issued by Finance companies registered under RBI and they allot a specified amount as loan and issue cards known as credit cards. By going on shopping spree, these credit cards attract some rate of interest on every transaction and thus the shop owner and the card companies get benefited. But what I feel that, when we have debit cards, we will be spending in guarded way as we know sooner or later the bank balance would reduce and keep aside some amounts for emergency. Whereas in credit cards, we go for spending spree unmindful of limits and end up exhausting all limits.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #593723
    Advantage is always in using Credit cards. They offer you a credit period during which time you enjoy a interest free loan of the amount you spend. However, the downside is that if you do not pay on due date you may be charged an usurious rate of interest (up to 40% or more per annum) on your balance. Credit card also has shields against misuse and you can contest a charge if not made by yourself and some other person has taken advantage of your personal information (identity theft). In the case of debit cards some sites and banks offer additional benefits like discounts or cashback. The main issue with using debit cards is that you are directly tapping into your personal bank account and in case of misuse it may be take a longer time to clear the issue and get the money back (if you get there!) Credit cards come with plethora of additional services like accident cover, loyalty points redemption and other benefits. The main thing you have to remember is to pay your dues (and not the minimum amount due) in time.

  • #593725
    One should have a debit card as well as credit card. Debit card is for safety, security and economical spending of our hard earned money deposited in the banks. Credit cards are for emergency use when we run short of cash in our account to meet emergency requirements, and should have the ability to repay the loan in time without any delay. Any delay would cost us to pay more. Hence, we should be very careful while choosing to use our credit cards. We may invite trouble to ourselves if our credit card dues are ignored. We should not choose to use credit card when we have enough cash balance in our bank account.
    No life without Sun ¤

  • #593738
    Mr. Sun,
    Your post has no merit. You seem to have not read what I have posted. If you use credit cards judiciously it is always better in the long run. Using credit cards is like obtaining a loan interest free.

  • #593741
    Gangadharan V.,

    Note that everyone has a right to express their own view on such topics. It is not necessary to make uncalled for statements that are not warranted. I have removed the needless personal remarks you made in your response in #593738. Please stick to discussing the topic only.

    Keep smiling...one day life will get tired of upsetting you.

  • #593753
    Gangadhar,
    We need not use credit cards if we have sufficient bank balance. We need to use credit cards only when we have no cash in hand or bank. The bank may not levy any interest but levies service charges for using the credit cards. I have both debit and credit cards, and seldom use credit cards. I strictly use credit cards only for emergency and ensure to have sufficient bank balance in my account. Never to use Credit cards for drawing cash from the bank as the interest rates are very high.

    No life without Sun ¤

  • #593757
    I am in favor of using a credit card. Debit card can be used only when you have money in your account. Credit card can be used up to the limit the bank allowed you. You can have a maximum of 45 days credit without any interest. As long as we are in control and we know our paying capacities, it is always better to use credit cards.

  • #593763
    Debit card and credit card are the present day options for cashless transactions. Both are quite convenient and have their own merits.

    For debit cards, banks charge a nominal fee of about Rs 115 per annum and no other fee during its usage. It immediately passes on the money to the the seller and debits from your account in bank immediately. So there is no free period for which money is retained with you as in the case of credit card. If you have insufficient fund in your account then it will not be possible to make the payment. Using your debit card you can withdraw cash from ATM as many times in a month as allowed by your bank.

    Now coming to the credit card which has a different philosophy in the sense that you are allowed to spend money on loan from credit card company and given some time ranging from few days to a maximum of 45 days for its repayment and no charges will be levied if repayment done in time. If repayment is not done in time interest charges will be levied from day of the purchase itself.
    You can withdraw cash also from ATM in emergency but transaction charges and interest charges will be applicable which will be a burden on your pockets till you return this money. Please remember credit card companies charge an annual fee ranging from a few hundred rupees to few thousand depending upon the card - ordinary or gold or diamond or platinum.

    So depending on one's usage one should go for debit card or credit card.

    Most of the people are using debit card because of its less cumbersome processes as compared to credit card.

    Knowledge is power.

  • #593764
    There are lots of advantages but also disadvantage of both credit card and debit card.
    Advantages of credit card : 1. If we need money in case of financial emergency than credit card is option to borrow cash.
    2. Intrest free period for repayment.
    3. If we purchase something than some cards give reward points for purchase which can be later redeemed for gifts and discount.
    4. Freedom to be cashless during shopping, travel and many more.
    Disadvantages of credit card : 1. they have high intrest rate if you fail to make payment.
    2. Security problems like theft a card or card details.

    Advantages of debit card :1. Some banks may offer additional benifits to debit card users as they are improving liquidity.
    2. We cannot over spend money through debit card.
    3. they are safer then cash because Your liability is limited if the card is lost or stolen.
    Disadvantage of debit card: 1. If you forget your PIN number you cannot use the card.
    2. Difficult to maintain spending descipline.

  • #593800
    I would always go for Debit card. If you use the credit card, you need to even pay the taxes while debit card allows paying only if you have balance in your saving account. Though both cards give loyalty or reward point, still I prefer debit card.
    Paresh B. Gujarati

  • #593819
    All transactions done through a credit card do not attract service tax. Only those transactions which have an interest component in them, like a loan of any kind (personal loan/housing loan etc) or any purchase converted to EMI, attract a service tax @ 14% + 0.5% KK + 0.5% cess tax.

    If one makes a purchase through credit card and pays fully before the due date, then he does not have to pay any service tax on that amount. So, it does make sense to get an interest-free loan for some time by making a purchase through a credit card if one can pay on or before the due date. That is what I understand from the billing of my credit card.

    Moreover the annual fee on a card is negotiable subject to your CIBIL profile. There is no annaul fee on my card. Once I was levied an annual fee, I told them to cancel the card. They just waived off the annual fee.

    When you talk, you are only repeating what you already know. But if you listen, you may learn something new!


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