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Credit cards differ from debit cards in the sense that when you use a credit card, you don’t have to pay the amount immediately because the bank pays on your behalf and you pay the bank later. When using a debit card, the amount is directly deducted from your account balance.
Credit cards have several advantages over debit cards.
- Credit cards are recognized and accepted universally especially in e-commerce transactions.
- There are more security checks on credit card usage than on debit card use.
- You can earn gasoline points, frequent flyer miles and many other point based rewards on your credit card purchases.
- There is a credit limit, so you cannot purchase more than you are allowed.
Which is safer to use – Credit Card or Debit Card?
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However, there are some drawbacks also of using credit cards.
- There are several hidden costs such as interest on late payments, fuel surcharges and transaction fees which increase the cost of possessing a credit card.
- While using a credit card in ATM cash withdrawal, a significant processing fee is levied.
- Despite the security checks, credit card is vulnerable to fraud and identity theft.
- You can acquire bad spending habits using a credit card and quickly pile up debt. If you get a poor credit rating, it becomes difficult to get another card.
Bottom line is that credit cards must be used in a responsible manner and the credit amount must be settled every month to maintain excellent credit rating.
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