Why Should you Opt for Credit cards Over Debit cards?

Posted by Arwind Sharma on January 16th, 2019

As many as 1 billion Indians either use a credit or a debit card or both to make their daily purchases. For any individual, using one instead of the other depends largely on the utility and benefits which these cards bring along.

However, considering them as financial products, the fundamental difference between credit card and debit card depends on the process through which the finances are made available for the user.

Credit card is a type of loan offered to the customer with a pre-determined credit limit. Users can utilise credit cards to make payments for their purchases within this pre-set limit. The funds utilised must be repaid within a due date every month. When repayment is done within this date, no additional interest is charged on the credit amount.

Contrarily, you can use your debit card to make payments which is linked to your bank accounts. A debit card is only a medium to pay for your expenses from your own money. These cards can also be used to withdraw cash from ATMs without incurring any additional charges.

However, beyond cash withdrawals, credit cards come with numerous advantages from the financial point of view which a user should consider also.  

Advantages of a credit card over a debit card

• Credit instead of debit

Credit cards come with a pre-set upper limit up to which users can borrow or use make payments. They can apply for limit enhancement, if required. A credit limit increase, however, will be subject to deliberation from the financial institutions. With a debit card, a user can only utilise the funds present in his/her account.

To the contrary, credit cards are not linked to their savings or current account. The obvious advantage is that they can utilise the cards to avail immediate funds in times of financial crises. All that a user is liable for is to repay the utilised funds within a specified due date every month.  

• Credit card loan

If you require higher amounts for some big-ticket purchases or to meet any financial urgency, you can avail a loan on your credit card. It’s a personal loan provided against the unutilised limit of your credit card. Such loans have no end-use restriction; so, you can use the funds for any requirement.

A reputed NBFC of India, Bajaj Finserv brings their exclusive Bajaj Finserv RBL Bank SuperCard on which you can avail a credit card loan, against a nominal 2.5% processing fee. Also, you can enjoy an interest-free period of up to 90 days for this emergency personal loan.

Bajaj Finserv additionally provides pre-approved offers on credit cards, and a variety of other financial products. Not only do these offers simplify the process of availing finances but they also save your time. All you have to do is share a few essential details to check your pre-approved offer.

• Easier resolutions of disputes

Credit and debit card transactions are directly relative to online fund transfers. A transaction on a debit card is an instant transfer of funds from you to the beneficiary. However, a transaction initiated from a credit card functions as credit and is not an instant transfer. There are multiple procedures and gateways to every single credit card transaction.

Irrespective of debit or credit cards, financial statements of either may include errors or discrepancies and force you to look for immediate resolutions.

Considering that debit card transactions are instantaneous, a disputable transaction will irreversibly follow through and debit the funds from the linked account. But this cannot happen in case of a credit card. The process of transaction is another basic difference between a credit card and a debit card.

There are multiple layers involved in the total procedure of a credit card transaction. After you initiate a transaction with it, the funds from your card provider go through numerous layers of verification before being credited to the beneficiary. Such a multi-layered process leaves enough room to rectify an errant transaction. So, it’s easier to resolve issues and discrepancies with a transaction through a credit card than one through a debit card.

• Reward points and specific purchases

Financial institutions offer reward points mostly as part of their loyalty programs to attract and retain customers. Users can redeem reward points and benefit from attractive discounts and vouchers on purchases made with those cards.

Additionally, there are certain cards which come with customised benefits for specific purchases. For example, fuel cards are tailor-made for fuel purchases at pre-selected gas stations.

Such features are more commonly available on credit cards instead of debit cards. For example, you can opt for the Bajaj Finserv RBL Bank SuperCard with which you can receive fuel purchase waivers, complimentary airport lounge accesses, a welcome gift of 20,000 reward points as well as numerous other industry-first features.

So, opt for a credit card over a debit card, if you want to enjoy all these advantages. Choose a financial company who can provide you with these features along with the best interest rates on credit.