Debit Cards vs. Credit Cards
Electronic money has many forms and probably the two most popular are debit cards and credit cards. Although both cards look very similar to one another, they are different. Well, they are not so different actually and what is more there are cards that can be used both as debit and credit ones but originally they were meant to serve a different purpose.
Historically debit cards appeared first. It is difficult to say which one is more used today but it is a safe bet that both debit and credit cards are really a very popular way of payment. Due to their different purposes, obtaining a debit card is easier and quite often you are issued debit cards even without applying for it.
The main difference between debit cards and credit cards is that with debit cards you draw money, your own money which is already in your account, while with credit cards you generally draw money that you don't have right now. No, you are not stealing the money; you are just using a kind of loan that the bank has provided for you. But the major difference is somehow blurred by debit cards with overdraft, which actually act like a credit card within the limit imposed by the allowed overdraft and by secured credit cards, which allow you to withdraw only money you have.
Basically, a debit card is a good substitute of your check book. Instead of writing checks, you can withdraw the money via your debit card. In many countries debit cards are accepted in more places than personal checks, so if you travel internationally, a debit card can be a better idea than a check book.
Similar to debit cards are ATM cards. In fact, an ATM card is a type of debit card, which you can use to withdraw money from an Automated Teller Machine (ATM). And quite often, when you get a plain debit card, it has ATM functionality as well. ATM cards are very convenient because when you have one, it is as if your bank operated 24 hours a day – you can withdraw money at any time you like. Well, the same applies to credit cards as well, so actually in that aspect debit cards, ATM cards and credit cards are equal – they allow you to operate 24 hours a day.
One of the irritating aspects of debit cards is that quite often they have a daily, weekly, or monthly limits. Sometimes it can be really frustrating when you can't draw as much as you need because of the limits. Anyway, this is your money and the limits prevent you from operating with it! Well, with credit cards limits can also apply. Generally limits on both debit and credit cards can be negotiated and in some cases, usually against higher charges, the bank can even waive them completely.
As already said, with debit cards you use your own money, while with credit cards you use the money the issuer has borrowed you. Obviously, with debit cards you can't get in debt because you are not borrowing any money, which is certainly an advantage when you can't control your spendings and are not able to repay the credit card balance in full on the due date. But with credit cards you use credit and if you manage to pay your balance in full before the due date, you are actually getting a loan for free (if you don't count the maintenance costs of a credit card, of course).
Another major difference between debit cards and credit cards is the level of protection you have against unauthorized spendings or faulty goods. In this aspect credit cards certainly beat debit cards, at least from customer's point of view. Debit cards also offer protection against fraud and faulty goods but generally it is much more difficult (and sometimes not possible at all) to reclaim your money back.
After this brief introduction of debit and credit cards, you might already think which one to choose. The decision is easy to make – if you can afford it, choose both. Each of them has its advantages and disadvantages, so having both of them is not pointless. But if you don't want to have many cards, you can always choose either a debit card, or a credit card only and adjust your spending habits accordingly.