Life today to a large extent revolves around plastic money. Credit or debit cards are used to buy tickets, pay for holidays or purchases, and even pay college fees. Children are given a credit or debit card the minute they turn 18 and, more often than not they tend to keep the same card for many long years.
On logging onto sites like Creditcards.com or other online sites offering credit cards one will find an amazing variety of credit card and debit card options even for students. By browsing the World Wide Web one can get a clear idea of the many options and the advantages as well as disadvantages. By comparing the various offers it is possible to determine which card is most suited to a student's needs.
?A student credit card is issued by Visa, Master Card, Discover, or American Express Card. These credit card giants and their associates generally fix a credit limit of around USD 500-1000 to begin with. While some grant a card without a guarantor others request the parent or guardian to cosign and agree to take on complete responsibility for the card.
?A debit card is issued by Visa or Master Card and is prepaid. Such a card does not need a consignee and a debit card requires no credit history to be eligible. Further more, used up money can be replenished online, through an ATM, and via a phone. In the case of debit cards the bank or financial institution is not offering a credit line it is just issuing a card for the amount held in security by them.
Essentially, a debit card is a card that accesses your own money. It adjusts expenditure against money in your savings account or against the amount pre paid. In this case instead of paying cash you are swiping a card and paying out of money already held by you. On the other hand in the case of a credit card it is a buy now pay later business. It is a kind of borrowing where you promise to pay the credit card company in full or part when the money arrives. Interest on the amount spent is payable only if you do not settle the bill in full.
The advantage of plastic money, debit or credit card is:
?You do not have to carry hard cash around and can use the credit or debit card to pay for expenses. ?Cards are accepted internationally while personal checks are not. ?Banks charge for use of checks but not for use of debit/credit cards.
Debit or credit cards are universally accepted and one can even purchase plane or train tickets or pay for unforeseen medical or hospitalization expenses using them. They are extremely useful as a stand by and can be used to establish a good credit report and score. A student credit or debit card trains kids in the effective handling of finance and puts them on the path to becoming responsible adults.
It was so long ago that there were distinct differences between credit cards and debit cards. This was largely due to the smaller numbers of banks that were regularly offering debit cards. Credit cards were in a league of their own, but not without consequences. As more consumers applied for credit lines the more misuse began to characterize the whole industry. Many people were left with enormous debts because by using credit they were using money they didn't really have.
Debit cards gradually caught on these same consumers were attempting to resolve their credit debt by living more within their means and using money that they actually had in their checking accounts. Debit cards or check cards as they're also called, function in basically the same way as credit cards meaning that you could make purchases but instead of drawing from an independent credit line, the card user would draw from the balance of their bank account, meaning they could only use the money they had and no more.
Debit differed from credit because you could also use them like ATM cards. Cash could be readily withdrawn or the card could be used at the counter to make purchases. This remained a firm distinction between credit and debit for a short time only. Credit card issuers saw the opportunity to close this gap and regain some of the market. This was accomplished by adding features to their cards including the ability to use them at ATMs to make cash withdrawals or cash advances.
Many companies eventually issued debit cards that could be used at places where credit was once accepted exclusively. The lines began to blur between the two card types. Banks and other financial institutions began issuing debit cards that were associated with the major credit card companies allowing them to have wider usage.
The differences between the two cards revolve around specifics of policy and matters of interest rate. Credit cards still attached interest to each purchase where debit cards generally do not have an interest attached because the money you are using does not belong to a lending company but you, the consumer. Of course, there are some advantages and disadvantages to both cards.
With credit cards the primary advantage is still having access to money that you would not have otherwise in order to make purchase or deal with emergency situations. You have funds when you need them. Again the real problem with a credit card is misusing them and creating a major debt through overuse.
Debit cards are good because you use money that is in your account and when it is used you do not have to pay it back. With a debit card, you do not have to worry about accruing serious debt - or not payments, interest rates, or finance charges. The debit car is an alternative to carrying cash and it offers more security since they will only work with a PIN number. The clear disadvantage is that you must have the money in your account to use it.
Both debit and credit can be useful tools, both convenient, yet both have clear advantages and disadvantages depending upon your circumstances. If you can make reasonable use of a credit card, it can be great option to have available if an unexpected financial situation should arise. Debits give you access to your own money and keep you more responsible for properly using your finances.
Both Arron Brooks & Joseph Kenny are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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