Recently, I went to eat dinner with a friend of mine to celebrate a long due party from his side. At the time of paying the bill, he took out his debit card and did the payment.
Once it was done, I asked him that why uses debit card and not a credit card. To this, his reply was that since debit card instantly debits money from the account, its easier to keep a check on the spending.
And this is the exact reason I personally don't use a debit card. First of all, personally I believe that holding a credit card does not make you a reckless spender and debit card stops it. If that is indeed the case, then someone has a shopping problem and needs medical help :D
According to me, there is no good reason to use a debit card over a credit card as a credit card is much better and here are the reasons for the same.
1. Since my account is instantly debited when using a debit card, one loses interest on that amount for not one but 2 months. The amount might seem to be small on the face of it but add all the amounts for a month and then calculate the loss. And for people who are thinking that how one loses 2 months interest, here's the maths. Suppose one spends on 29th of a month, the credit card statement will come by 15th of the next month and the payment needs to be done by 5th of the month after that. So, if one had used my debit card on 29th itself, the money is debited but credit card payment is done in the next 2 calender months.
2. Credit card gives more control in terms of security any day! God forbid, if someone loses debit card, then the account is under threat but credit card prevents one from that too.
3. Using credit card gives one reward points too which can be redeemed later on, which is not the case in a debit card.
4. And credit card allows one to spend much more than my account balance if the limit is quite high. This is really useful in case of emergencies and some bulk purchase if one needs to do.
So, personally I see no reason of using debit card apart from it being used to withdraw money from the ATM!
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All credit card companies are gonna love you for this post ;)
ReplyDeleteKewl post...!!!!
ReplyDelete1. The interest on your savings account, at least in my bank, is calculated on the lowest *quarterly* balance, not on the lowest monthly balance. So if you're spending at the end of a quarter, your interest will be saved, because you'll pay that in the next quarter, but two months out of three, it'll be of no use!
ReplyDelete2. A stolen credit card can be misused just as much as a stolen debit card...!
3. Yeah, that's true, no contest there...
4. Again, true, but if an expenditure is more than my entire account balance, unless it's an emergency, there's no way I'm spending that much!!
Many times I forget the due date for clearing my bills and end up paying late payment fees.
ReplyDeleteSo personally, I would opt for the debit card, since I am unable to shake off this habit of mine..
@LK
ReplyDelete1. I am not talking about the quantum here.
2. Agreed, but you don't lose money from the account directly.
3. :)
4. K!
@person within
Now, that's someone one needs to be careful with :)
Now, this is the first article ever that advocates the use of credit cards against debit cards ;)
ReplyDeleteAmit- You do get rewards on using debit cards as well - i had an ABN AMRO debit card which gave me rewards on shopping, getting an e-statement of my account, using net banking etc etc
ReplyDeleteSounds really amazing! I am from London and went to NYC when I was younger, really want to go again!
ReplyDeleteAnother article advocating this - http://economictimes.indiatimes.com/quickiearticleshow/5994787.cms
ReplyDelete