What is most suitable for me, a debit or a credit card?
MoraBanking | 12.20.2017 | Meritxell Ribera Ambatlle
We use them every day, we pay with them and they most definitely make our lives easier. But, do we actually have the card that best suits our requirements?
In order to answer this question, we will review some of the basic general differences between debit and credit cards in this post. You will then be able to decide which one suits you best.
When purchases are debited
The main characteristic that sets them apart is when card purchases are debited. Purchases made with a debit card are debited immediately, namely, the amount spent is deducted from your account at the time a purchase is made. However, if a credit card is used the money is not debited until the card statement is billed (usually at the end of the month) and the total amount of the payments made over this period are debited from your account.
This is because a credit card is in fact money that the bank lends to the cardholder (hence the word “credit”), whereby no money is paid at the time a purchase is made.
However, a debit card is a sort of “purse”: it enables cardholders to have immediate access to the money in their account without having to go to withdraw cash from a bank or ATM. This is why this type of card is fairly useful for everyday spending.
The two types of card can be used to make payments (in person and online) and to withdraw money from a current account at an ATM.
However, credit cards allow other transactions and payments, which are not available with debit cards, such as:
- Cash withdrawals. Even though there are no funds in your current account, you can nevertheless get hold of cash (either from an ATM or by making an online transfer to your current account) to make payments.
- Deferred payments, which enable you to pay off your card bill over a number of months.
- Standing orders for online subscriptions (music, TV, travel and other premium services) that sometimes can only be made using credit cards.
- Bookings and deposits at restaurants, hotels and other hospitality services.
- Special promotions and discounts that some online stores and other establishments offer exclusively for credit card payments.
As debit cards are directly associated with the balance in an account, they allow payments to made up to the total amount in it. For credit cards, purchases may be made up to a card’s spending limit, which varies according to how much the bank has authorised can be owed.
In practice, this may work otherwise as most cards are subject to a daily limit on purchases and another on ATM cash withdrawals, which will depend on the type of card and the bank that issues it. In our case, for example, Electron (debit) and Classic (credit) cards have a standard daily limit on purchases of up to €3,000, and of between €340 and €600 on cash withdrawals respectively. These limits may be changed by a branch to match each customer’s needs.
Some people prefer a debit card because it helps keep their spending in check, as they have greater control over what they have paid for. Other people prefer the freedom that a credit card gives them, above all if they are faced with unexpected or emergency expenses, in addition to the possibility of deferring payments.
Requisites, insurance and fees
In the case of credit cards, as the bank is extending a loan to customers, one of the usual requisites is that their salaries be directly paid into their account as a guarantee of regular income. Depending on the bank that issues the card, there may be other requisites and checks made on credit records before approving a card and its spending limit.
As banks are lending money to customers, the fees for holding a credit card are higher than in the case of debit cards. Certain charges or fees may be applied for operations that are only available for this type of card (such as cash withdrawals on credit and deferred payments).
There are also differences in the prices and cover given by insurance associated with cards. Although as a general rule the security arrangements for purchases using either type of card are the same, there are normally greater advantages and insurance cover for credit cards.
As you can see, there are many differences between credit and debit cards. Choosing the most suitable one for you will depend on your needs: Is it for everyday spending? Do you need it to pay for a trip or to buy a new TV? Would you like more flexibility in the method of payment or would you prefer to have a tighter control over your spending? It is always important to be well informed about the characteristics, fees and features of each card in order to be able to choose the one that best suits your needs.
Remember that according to your personal circumstances, there is a wide range of credit and debit cards available to you at MoraBanc. For instance, the Visa MoraBanc Jove card is free of charge and we don’t charge any fees for withdrawing cash from any ATM in the world that accepts VISA.
Furthermore, all of our credit and debit cards give exclusive discounts at our partner stores, which are posted on our website.
And remember, if you require further information about their features and fees, you can contact us via TeleBanc on +376 884 884, at any of our branches or by filling in the contact form that can be found at the bottom of our website’s pages.
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