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With the mass distribution of credit cards, we can hardly imagine modern life without them. They let us purchase everything we need even if it exceeds our budget, and repay later, when we have an opportunity for that. Debit cards, in turn, have given us unlimited access to bank accounts at any time of the day.
By the way, you can use both credit and debit cards to make purchases in online stores. However, it is still worth finding out which of them is more advantageous. A clear understanding of their key features will help you save and properly manage your money.
When you make purchases with a credit card, you borrow money from the credit card provider and repay the debt within the period determined by the bank. If you fail to pay on time, you may be charged interest, which you will also have to pay.
There are different types of credit cards:
Credit cards have a certain limit, the maximum amount of money you can spend. If you exceed your credit limit, you may be required to pay additional fees. The limit is set by your lender based on your personal data including your credit history and some other factors:
The main goal of the lender is to offer you an affordable sum that you can repay without any problems
Before you start using a credit card, you should check the credit limit. To do that, just examine the information that was provided to you when you got a credit card. In addition, if you use your lender’s mobile app, you can find all the relevant information about your status in your personal account.
It will also be useful to keep track of your credit card spending so that you do not happen to go over your limit.
The credit limit can go up or down. It will all depend on how much the lender trusts you. A credit limit increase is approved for some users if they use their card for a long time: from six months or a year.
To increase your chances, you should follow some rules:
If you do plan to request a higher credit limit, we advise you to make sure that you can actually pay it off. Large loans pose risks since there is always a chance of borrowing too much and falling into a debt trap.
You may be charged additional interest in the following cases:
You will most likely have to pay a fee for using a credit card while out of the country. However, the good news is this can be avoided if you learn how to properly manage your spending.
Keep in mind that some hotels, airlines and car rental companies may only accept credit cards for bookings. Whether you are on vacation or on a business trip, traveling with a credit card is a safe and convenient way to spend money abroad.
When you pay with a debit card, you only spend your own money. If there are not enough funds on your balance, the transaction will be rejected. By the way, the funds are transferred to the recipient’s account automatically, without any interest charged on the payment. A debit card is best suited for:
Moreover, there are most often no annual fees and charges for the use of debit cards. In addition, some banks offer cheap insurance for unforeseen situations. Cash withdrawals at your bank branches are generally not subject to fees. However, they may be charged if you use ATMs of other banks.
Furthermore, debit cards offer customers more favorable terms and conditions than credit cards. If you have access to your bank account, you can use your debit card as well. There are no limits, scores, or applications required.
You can use both credit and debit cards. The main thing is to do it wisely and carefully read their terms and conditions.