In South Africa, over three-quarters of the population has either a credit card or debit card.
Nowadays with the increasingly smart methods for money transactions, we are edging closer to realizing a cashless society.
Carrying a plastic card in your wallet is absolutely better than paper cash. It makes life more convenient and safe.
But if you’re carrying a card in your wallet, it could be a debit or credit card. What’s the difference between the two? Which one is better for your lifestyle?
Let’s answer the question of credit card vs debit card and more below.
What’s a Debit Card?
Your debit card is directly connected to your bank account. That means that every time you withdraw money or purchase something, the amount is removed from your account.
As a result, you won’t be charged any interest because you’re not borrowing money. Instead, you’re simply using the bank to look after your money for you.
You receive an account number and a PIN number. It’s not as secure as your credit card.
What is a credit card?
The number of people in South Africa with credit cards has doubled over the last 4 years. And yet, there is currently fewer than 20 percent of the population with a credit card.
Credit cards allow you to borrow money when you make payments. You have a credit limit on your card which allows you to spend up to a certain amount every month.
This allows you to spend money you don’t have yet. It provides you with the flexibility to make big purchases without worrying about whether you have enough in your current account.
It’s important to pay off the monthly balance on time. If you don’t, you’ll be charged an interest. Make sure you check out the terms and conditions of the credit card before signing up.
Credit Card vs Debit Card: Which Is Better?
You need to know the differences between a credit card and a debit card so you can make an informed decision about which one is right for you.
If you have plenty of money in your bank account, using a debit card is probably better for you. That way you don’t have to borrow any money to make a payment. You don’t risk going over your budget or being charged interest on your borrowing.
However, this doesn’t mean you shouldn’t also take out a credit card.
Credit cards are extremely secure when it comes to making big payments. You can get cash back and accumulate points which can be redeemed later on.
Plus, using a credit card can boost your credit rating. This is really important if you want to take out mortgages or others loans in the future.
The Bottom Line
Now that you know the differences between a credit card vs debit card, you can decide which is right for you.
But it’s also important to know that you can also have both types of cards at the same time. This way, you can take advantage of their benefits.
Do you have any more questions about loans, credit cards or debit cards? Explore our FAQ section.