Why Using a Credit Card Makes More Sense Than a Debit Card?

Updated on: 03 Jan 2024 // 4 min read // Credit Cards
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A Debit Card is essentially an instrument, which helps you use your own money to make purchases and payments. On the other hand, a Credit Card entitles you to pay for your expenses, by borrowing money from a lender.

The Difference

Credit Cards are similar to Debit Cards in the way that they both fall under the category of plastic money, but, that is the only similarity.

For what it’s worth, a debit card allows you to spend your own money as and when required, which happens to be its biggest advantage as well as a significant limitation at the same time. Since you are spending your own money, you need not pay any interest on it. However, once the money is exhausted, you cannot make any further payments.

Contrary to this, a credit card allows you to borrow money for your expenditures. Similar to debit cards, this is one of most imperative advantage and a critical limitation. Since you are borrowing the money, you can actually spend more than your current savings, and/or your income.

However, because the money is borrowed, it attracts an interest if you fail to repay the same within the stipulated time period. So, why exactly is it better to choose a credit card than a debit card to manage your expenses?

Advantages of Credit Card

A credit card, if used responsibly, proves to be a great asset. A close look at the following advantages of the same will help you agree to the fact.

It Helps You Build Your Credit

In order for you to procure a Home Loan, Personal Loan, Car Loan or other credit options, you must have a favourable credit history and a good credit score.

For you to have this history, it is important that you hold a credit card. If you do, and you manage to pay your credit bills well within time, it helps you build a decent credit history.

It tells the lender about your financial stability, and your ability to pay back loans efficiently. This, in turn, ensures that the lenders such as banks and other financial institutions, easily sanction your loans.

Moreover, if your credit limit is fairly high, you can also apply for bigger loans and get them sanctioned conveniently.

As can be understood, this is not the case with debit cards.

It Helps You Avail Various Offers

Credit card companies would always want people to rely more and more on credit cards. In order to do so, the companies offer numerous cashback plans and discounts. The best credit card offers are not just confined to regular shopping, but also to lifestyle expenses such as traveling, fine dining and the purchase of luxury goods.

Moreover, credit cards also have tie-ups with various brands and offer additional cashback and discounts when a customer purchases the products or services offered by these brands. An excellent example of the same is – Miles Card, for customers who are frequent travellers.

Considering these schemes, one can easily conclude that using a credit card can help save a lot of money.

It Offers Convenience During Travel

Most credit cards enjoy a worldwide acceptance, thus making it easier for you to make purchases and pay your bill while traveling. A credit card eliminates the need for you to carry large amounts of cash, and also to get it exchanged into local currency.

Moreover, numerous hotels and car rental services offer convenient booking alternatives if you pay using a credit card. While, paying via credit card may incur international transaction fees on every transaction, but the convenience it offers is simply unmatched.

Limitations of Credit Cards

As is the case with most things in life, even credit cards have certain limitations.

To begin with, credit card companies often levy certain fees such as annual fee, balance transfer fee, international transaction fee, etc. It is, therefore, advisable for you to read the fine print, before applying for a credit card.

Credit cards empower the customers to make purchases, even when they are running short on money. Hence, if not used judiciously, these cards can lead you to overspend. This, in turn, will obstruct your capability to pay back in time. If this happens, you will be liable to pay the interest on the delayed payments, thus leading to unnecessary expenditures.

Thankfully for you, both of these limitations of credit cards can be easily overcome through disciplined spending. Moreover, given that the advantages of using a credit card are far better than these limitations, it makes perfect sense for you to start using the same instead of the debit card.

Wondering how to find a credit card that helps you reap all the benefits mentioned above? Well, let our Loan Specialist help you construct a strategy based on your specific needs and preferences.

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.

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