When it comes to financial adjustments, different people have different ways to help themselves. Some people prefer debit cards while others use credit cards to their own benefits.
Cashless transactions for everyday purchases are getting more and more common. This has led to certain innovative ways of transactions like EMI on debit cards. EMI on debit cards got very renowned after shopping sites like Amazon and Flipkart included it as a method of payment.
The advantage that this kind of payment has is that you do not have to wait to collect enough money to buy an expensive item. It is almost as if you borrow some money and use it to buy the item, and then pay for it at some interest rate every month for a given time.
If you are someone who is confused between whether to buy a debit card or a credit card, here are some reasons why should go for a debit card instead of a credit card!
1. You use your money
Debit card payments are exactly like cash payments. When you use your debit card for making a purchase, the amount of money gets deducted to make that purchase. It is the same as giving out cash to make a purchase.
This is what makes it very easy to understand the mechanism of debit cards.Credit cards, on the other hand, makes purchases by drawing you into debts. You will have to pay the sum back with some additional amount of interest to your creditor.
That can prove to be unnecessary pressure on you since you will have to pay back within the due date. Otherwise, the interest gets capitalized into your balance.
2. Interest rates do not matter
Debit cards have nothing to do with interest rates of the bank you have your account in. You use your money and you do not need to pay anyone back. But the story is different when it comes to credit cards.
Credit cards charge interest rates. They deduct it from your bank account along with the amount that you want to use to buy something. But that isn’t the end to the troubles. Credit cards impose high rates of interest.
It is also true that only a minority is able to pay back their “debts” well within time. For those who are unable to do so, they have to witness their interest amounts being capitalized into the balance. Choosing credit cards can hurt your financial conditions in certain cases because of this.
3. Taxes go down
What a lot of people do not know is that they have to pay lesser tax when using debit cards as the payment mode. With credit cards, you have to pay a much higher tax that further hurts your pocket, in this case, your bank account.
4. You earn interest
Banks allow you to avail of interest-bearing accounts. On using these accounts, you earn dividends. With a debit card on such an account, you can financially flourish a lot!
5. Earn rewards
You might know that credit cards help in earning rewards on payments. What you might not know is that you can also earn rewards using debit cards. What is the advantage here then?
With debit cards, you get multiple such merchants and retailers that offer you rewards. On top of that, debit cards do not charge you any processing fees to get rewards from the merchants. Isn’t that great?
Debits cards surely have a lot of advantages over credit cards. However, the final decision is yours. And the final decision should be made after thorough thinking about your financial conditions.