Debit Card Vs Credit Card: Risks And Benefits

Plastic money is the new way of having cash with you without actually having it.With easy cancellation facilities in case of theft these ensure that your money remains safely in your account while you transact with ease.

Does one score over the other on certain counts? The risks and benefits associated with using both are discussed below:

• Using a credit card means taking a small amount of loan from the bank and promising to repay the amount, usually within a month.

• Using debit cards mean using the cash already available in your current account without the concern of having to pay the lender back.

• Debit cards can be used to withdraw money from ATM machines as well. A PIN number is provided which might be required to be punched in sometimes while shopping.

• Debit cards do not require any picture ID before issuance unlike one for credit cards. Thus chances of fraud are high in the former.

• For a credit line, in case you do not pay the bills on time the lending company charges high interest on the balance amount. This is the greatest benefit with a debit card as you do not have to pay any interest on the money since it is all coming out of your existing funds.

• The legal liabilities are strict in case of credit facilities. The consumer liability is $50 for fraud cards if notified within 60 days in written.

• If you report the fraud in a timely manner then you are protected from the unauthorized purchases. The debit card owners may not always have this facility since many of these are contactless, meaning you wouldn’t need your pin if the purchase is below a certain amount.

While the balance may tilt in favour of debit cards some would still favour a credit line for making purchases. Therefore at the end of the day it remains a matter of personal choice.

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