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Usages and disadvantages of using credit or debit cards

It is the payment method that more people use and that we use more in our day to day. You no longer have to carry money in your pocket to pay at the neighborhood bakery or the corner kiosk. Buying (and spending) has never been so easy. There are establishments reluctant even to implant a simple dataphone (POS) to be able to collect through these “pieces” of plastic. They are debit and credit cards.

Making payments or withdrawing money

Making payments or withdrawing money

The cards provide a great service to the user when making payments or withdrawing money from an ATM, in addition to providing security, as they do not have to carry cash. Spain is one of the European countries with the largest network of ATMs and sales terminals.

But is it better to use credit or debit cards? It is important to know the usefulness of each of them, to hire the one that best suits our needs.

Differences between debit and credit card

Differences between debit and credit card

In both cases, they are plastic material elements with a magnetic strip on the back, a chip (those from a few years ago did not carry the chip) and an embossed numbering, as well as the name of the holder and the expiration date on the front of. The hiring of these cards oblige the client to accept the conditions established by the financial entities that issue them as well as to return the commissions and expenses derived from their use.

The difference between the two lies in the fact that while debit cards use the funds that the client has in his current account, without allowing the dreaded “red numbers” (although it is true that banking entities establish a maximum amount to be used daily ), the credit card is used rather to defer payment of a certain amount until the settlement date.

Amounts to be paid are higher

Amounts to be paid are higher

In general, the amounts to be paid are higher with [credit cards] than with debit cards, because in addition to the deferment they allow to divide the payments, but you have to be careful due to the interest that in most cases you have to pay for its use and check the balance of the bank account to avoid possible overdrafts in the bank account.

Debit cards have fewer protection and insurance measures than credit cards. A common feature is the ability to withdraw cash at ATMs and make deposits to associated bank accounts. And, of course, payment in commercial establishments that allow its use.

So, credit or debit card?

So, credit or debit card?

Currently, the greater control of spending forced by the precarious situation of Spanish families has produced a considerable increase in debit cards compared to credit cards. There has also been a decrease in purchases and therefore in deferred payments.

This, together with the rising cost of commissions in recent years, makes the use of the debit card better valued by users, especially for daily purchases and to know the bank balance at the time.

Another widely used option, mainly due to the need of banks to attract customers, is to have both cards. Many financial institutions offer the possibility of having both, and in the case of credit, do not pay any commission as long as a series of purchases are made per year (established by the bank). Thus, a person can use his debit card on a daily basis and for purchases of a greater volume he can use the credit card by postponing/splitting the payment.

In any case, the decision to choose between one and the other depends on each person and each circumstance. Some may find it better to use debit cards to control their spending, while others prefer to use credit cards for the additional services it provides.