The credit card is one of the most popular payment instruments in the world, but this term is very often associated with any card used to withdraw at the counter or for payments at POS terminals.
This confusion is normal given that credit and debit cards have several features in common.
Both types of paper, although accepted in almost all physical and online stores, have certain characteristics that make them suitable for particular customer profiles.
For this reason, we will shed some light on the differences between the two types of paper.
Credit card is a payment instrument that allows you to pay money without using cash. Unlike debit cards – the use of which involves the immediate debit of the amount from your bank account – the credit card will be postponed with the credit card. That is, the money is withdrawn from the bank account only in the middle of the following month in which the payment took place, or even in installments, if the owner opts for this choice.
The card shows the identity of the cardholder, the card number and its expiry . The owner is required to put his signature in the space provided.
In addition to being a payment instrument, the card can be used as a withdrawal instrument at the ATM, via PIN.
Each card has a monthly usage limit , after which it is no longer possible to make purchases until the following month.
What are the disadvantages of a credit card?
After discovering the operation, as well as the pros, it’s time to list the “contra” and the dangers in having and using a credit card.
- Financial control: As mentioned above, the money is withdrawn from the account in the middle of the following month, which if on the one hand you allow yourself to spend as if you were not there tomorrow, it could make it difficult to keep control of your money, and to as a consequence, you may find yourself in the situation of not having enough funds to return to the bank.
- Costs: Credit cards have high costs that are charged after withdrawing from ATMs or after making payments at the POS. Therefore (especially abroad), you need to be careful about how you spend your money.
- Difficulty in obtaining it : If in the past you have been a “bad payer”, requesting a credit card will be particularly complicated, as you will be asked for documents such as: income, work situation, level of debt, etc.
- Annual costs : Another major disadvantage in using a credit card is the high annual management and maintenance costs.
The debit card, called in Italy “debit card”, is a type of payment card that requires the debit of the expenses to be paid to the bank account of the owner, at the same time as the transaction is carried out. In the event that the payment instrument is linked to a precarious credit, it is more specifically referred to as a rechargeable prepaid card.
The term “debt” derives from the fact that the funds, spent at commercial and similar establishments or withdrawn at bank automatic teller machines by means of the card, are immediately debited to the account of the owner.
The Debit Card can be used for:
- Payments at POS terminals.
- Buy online .
- Withdraw cash at ATMs.
- Make purchases and withdrawals abroad .
- Make a direct debit (SDD) of the various utilities (Water, Electricity, Gas, Internet etc.).
What are the advantages of debit card?
- Total control of finances : Unlike credit cards, debit cards, after any payment, deduct the funds from the savings you have on your current account, therefore there is no danger of spending more than you have on your account.
- Lower commissions : Most debit cards are free, and the withdrawal or payment costs are particularly convenient.
- Accessibility : To get a debit card you will only need to open a bank account.
Like any type of banking product, the Debit Card also has some disadvantages. For example:
- Limit of transactions (daily, weekly or monthly) that are normally established by the bank that issues the card.
- Inability to build your credit history to obtain future loans from a bank.