Ah! The first day in college and life takes a major turn, it’s time for you to plan your budget. Where on one side a credit card for students may prove a nightmare or a blessing depending upon spending habits, on the other the debit card may not have such a huge impact on your lifestyle apart from convenience. So, what is better a credit card or the debit card for students? Come let’s find out:
Debit Card Vs Credit Card
- Debit Card: A debit card is a payment card, issued by banks and other financial institutions that allows its users to make payment directly from their account when the card is used.
- Credit Card: A credit card is a payment card, issued by banks and other financial institutions that allows its user to borrow interest-free credit for a short period up to a pre-specified credit limit. The credit limit may be decided upon income, credit limit, and other important criteria depending upon the card issuer.
- Debit Card: Debit Cards are less safe than credit cards. Only if the fraudulent transaction is reported by the card user immediately when such transaction takes place, the liability will get transferred.
- Credit Card: Credit cards are much safer than debit cards. If a fraudulent transaction is reported by the card user within 48 hours of such transaction, the liability of the customer is directly transferred to the bank.
- Debit Card: As the amount is directly deducted from the account of the user when any payment is made, there is no debt involved.
- Credit Card: As the amount is paid by the bank and not the actual user at the time payment is made by using the card, it involves debt. The money may be returned in full without any interest charges before the due date, but in case the user forgets, the hefty is interest is charged from the user.
- Debit Card: The debit card has comparatively less or no rewards as compared to credit cards. They neither offer any cashback nor any points or other rewards.
- Credit Card: Credit card is comparatively much more rewarding as compared to debit cards. They offer various rewards to their users, like cashback, points, and miles.
Interest and Fees:
- Debit Card: Debit cards don’t charge any annual fees from its user, unlike credit cards. Also, they don’t charge any fee for withdrawing cash at your bank’s ATM.
- Credit Card: Most credit cards charge high APR and annual fees from their users, unlike debit cards.
- Building Credit Score
- Debit Card: Debit cards don’t help you in building your credit history, hence there is no impact on credit score when transactions are done.
- Credit Card: Credit cards help you in building your credit history. A good credit history would have a positive impact on your credit score and bad credit history would harm your credit scope.
After reading this article you are well aware of the basic differences between debit and credit cards. Where on the one side credit card comes with more rewards, the debit cards help you in avoiding the risk of debt, each one of them is neither inferior nor superior, it depends on the habits and preferences of the user. So, it’s time for you to decide which one is better for you and take one step forward in becoming financially empowered.