Debit and credit cards – what are the differences?

The majority of us are aware of the fact that we have the option of using several different types of payment cards. But what cards do we actually need? What are their characteristics? When to reach for a credit card, and when will a debit card work better? Advise!

Although the cards mentioned above seem to have the same function – they replace the cash in the wallet, in fact there are significant differences between them. The vast majority of us use debit cards. We usually get such a card simultaneously with opening a bank account. In turn, we have to apply for a credit card. And it is worth realizing that a credit card is not always necessary, although it is often useful. But what exactly is the difference between a debit and a credit card if they are both used for payments?


What is a debit card?

What is a debit card?

We can define the debit card as the basic one, which the vast majority of us have in our portfolio. We receive it immediately after opening a new account in the bank and it does not involve any additional fees or formalities. The debit card is directly assigned to our personal account, and the funds available on it are the same as the funds that we have accumulated on our bank account. Using this card, we can make cashless payments, as well as withdraw money from your account.

Debit cards can be divided into several different types in terms of payment organization. The most common are Visa cards. This is undoubtedly the most popular card organization in our country. Mastrcard is the biggest competition for this organization. But does it really matter nowadays whether we decide on Visa or maybe Mastercard?


Visa or Mastercard debit card – what to choose?

Only a dozen or so years ago it was possible to indicate two clear differences between Visa and Mastercard – they concerned mainly the origin of the products. Mastercard was also often seen as this more modern option, but currently we do not meet this view anymore. However, if we are the type of traveler, then we should be aware that we will not use both types of cards in every country. Therefore, when deciding what to decide on, it is worth considering which will be a better choice when it comes to the destination of our travels.


What is a credit card?

What is a credit card?

Now that we know what a debit card is and what it is used for, you should also consider a credit card. When paying by credit card, we really use the bank’s money, not the money we collect. What amount is available to us depends really on our creditworthiness. In other words – when using a credit card, we actually take out a revolving credit facility up to the limit that was set by the bank.

These types of cards allow us to pay for purchases when we do not have sufficient funds on our bank account. Before the bank grants us such a card, it thoroughly analyzes our creditworthiness to determine what amount of debt will be repayable to us. We repay this card when the bank provides us with information on the amount of debt. The interest rate associated with using a credit card depends on the bank where we decide on such a service.


First loan for free or credit card?

piggy bank

If you find yourself in an emergency that requires you to get some extra cash, which we don’t have at the moment, it may be a good idea to take out a short-term loan. Especially if it will be our first loan. Then we have the option of borrowing completely free, up to 3000 USD. In addition, the whole process will be much shorter and less complicated, and the money on our account can be really fast – the time depends, among other things, on which bank we have the account in.