The days of cash are dwindling and a growing number of transactions are being made using some form of card payment. Whether it is a credit or debit card, the growth of card payments in the last couple of decades has been rapid.
Online shopping has also helped with the rise in the use of payment cards, with goods and services being purchased either with credit or debit cards.
However, many people still aren’t entirely sure of the main differences between these two forms of payment and the pros and cons of using either one. In order to look at those differences, we must first look at the key features of each one.
A debit card is usually connected to a current account. When making a transaction, you can only use the money that is in your current account at that time. Debit cards do not require any form of borrowing and, as such, a high percentage of people can be issued one because banks will not generally look at your credit history.
Most merchants will not charge a fee for using your debit card in their store or online and you will not have to pay interest on the amount you have spent because you are not borrowing any money.
When you make a transaction with a debit card, the merchant puts a hold on that amount in your current account, so it may not show up immediately and can sometimes take a day or two.
Debit cards can also be used to withdraw cash at ATMs and can be used abroad, however, they may be subject to additional charges.
When you are first issued with a credit card, you will be set a credit limit. To use the card, you make a purchase or pay for a service by using the line of credit you have been granted. This amount then goes on a bill which you will normally be issued with each month. If you pay off the full amount each month, then you will not have to pay interest on those transactions. However, if you don’t pay your credit card off each month, interest will be added on to it until you clear the full amount.
Interest rates for credit cards can usually be quite high which means the longer you go without paying the full balance, the more you will eventually have to pay.
If you use your credit card regularly and keep up with the payments, you will build up a strong credit rating and may be offered an increased credit limit. A good credit rating can also give you wider access to other products such as loans and mortgages.
Credit Card v Debit Card – Which is Better for Me?
That all depends on your circumstances. A debit card is great for someone on a tight budget, but does not like carrying cash around. Debit cards can be used online and in-store in, the vast majority of cases, merchants will not charge a fee for using them. However, you will not be able to build a credit history by using a debit card which could restrict your access to certain products later on down the line.
A credit card can allow you to make bigger purchases and pay them off over time, however most credit cards have high interest rates. A credit card can provide added security for purchases as it is much easier to get a refund through a credit card is there has been an instance of fraud.
Does Suits Me® Offer Credit Cards and Debit Cards?
Suits Me® doesn’t currently offer Credit Cards.
All Suits Me® accounts come with a contactless Mastercard® debit card with exclusive access to our cashback rewards programme.
Opening a Suits me account is quick and simple using our easy to use online application form. Taking only a few minutes, once your application form is complete, providing the information given is correct, your Suits Me® account will be open within 15 minutes. Once your account is open, you’ll gain instant access to your account details (account number and sort-code) and online account to be able to start managing your money. Your debit card will then arrive in the post free of charge within 3-5 working days.