Credit or debit can be good allies when it comes to financial planning, but it can also be great villains for those who don’t know how to make good use of these services.
Some people are resistant to credit or debit card usage and always prefer to pay cash, however there are benefits to these applications. The important thing is that they are employed intelligently.
What is the difference between credit and debit card?
A credit card is a form of cash payment in which the amount used is sent to the invoice on a set date. This modality also enables the installation of values, in most cases, without the addition of interest.
The debit card is a possibility of electronic payment which discounts the amount spent on the user’s account, without the need for withdrawal.
Therefore, choosing to pay on credit or debit should be based on the needs of those who perform these modalities.
Advantages of Paying In Debt
In addition to ease of use, paying by debit card brings other gains:
- More security over cash
- Allows tracking of expenses made through internet banking
- There are hardly any charges for using the card.
The debit card is available in the savings account, salary account and current account.
In the checking account, some banks automate the overdraft if the user makes a purchase and has no amount available for payment. The alternative overdraft is one of the disadvantages of paying in debt. The ease of use of this service can bring great interest to the consumer. That is, the willingness to make quick purchases is a danger to those who do not manage money well.
Advantages of Paying on Credit
Just like debit, credit cards also allow you to track spending and this can be a great ally when it comes to financial management.
Determining a specific amount to spend on credit means better planning without allowing the user to get into a snowball.
In addition, some credit card advantages include:
- Bonus points for those who use the credit card correctly
- Have a fixed date to make all payments for the month
The disadvantages of paying on credit are directly linked to the way of use.
For example, a large card that offers good frequent flyer programs is likely to charge an annuity, but these services are not always enjoyed by the customer.
For those who do not usually resort to credit, loyalty programs may not be very advantageous and choosing a card with no annual fee is a more sustainable attitude.
How to use credit card
Understanding that a credit card is not a salary extension is one of the first topics to make the most of this service.
Then you need attention to:
- Pay the invoice in days
- Avoid unnecessary expenses
- Control installment purchases
- Negotiate the card annuity
- Do not enter revolving credit
- Watch out for loyalty programs.
In case of credit card misuse, there are some tips that can help you get rid of the installments.
- Establish lighter consumption
- Decrease the habit of buying on time
- Practice the household budget
Lastly, avail the loan with lower interest rates than the credit card.
Therefore, the best thing to do when choosing debt or credit is to compare which one is the most advantageous option and which brings the most financial benefits. Whether it’s discount on purchases paid on debit or getting points through credit.