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ed@eleven-tenths.com

Should I use a credit or debit card? It’s a common question. But very often, the answer isn’t that simple.

Both options have their perks for sensible spenders.

If you’re still trying to decide, our guide can help you to narrow down your options.

What’s the difference?

Debit and credit cards may look similar, but their purposes are very different.

Debit cards take money out of your account with every purchase. You can only use your debit card if you have sufficient funds in your account. If not, your card will be declined.

A credit card is different. As its name suggests, it’s based on credit and not your own assets. Credit put simply, is loaned money.

Card users are generally given a spending limit by issuers. They have to pay back what they’ve borrowed, or the minimum repayment, at the end of the month. If they only pay the minimum repayment, they are charged interest by the credit card provider.

As always, financial organisation is key for either option.

Is one better than the other?

It depends on how you plan to use your card.

A debit card can be helpful if you want to keep an eye on your spending. Why? Because through this option, you can’t spend what you don’t have. Certain banks also offer cashback at various retailers when you use your debit card.

A credit card, of course, allows you to borrow funds. You just need to reimburse your lender for it. If you’re certain that you can do this, you may want to consider this option.

It won’t just cover your bills — it could improve your credit score, too. This is what lenders use to assess applicant eligibility. It evidences whether you’re likely to clear credit in time. And so, if you pay off your bill in full and on time, you’ll be able to strengthen your record.

Before you decide on a card, it’s important to consider all your financial options.

Is it easy to manage a credit card?

In short, yes. You just need to know how. It comes down to organisation and being on top of your finances. Spending some time to work out a monthly budget is a task worth doing. This way you’ll know how much you have left to spend each month and you won’t overspend on your credit card. If you do, you risk falling into a vicious cycle of only paying off the minimum payment and accruing interest each month, leaving you more and more likely to be unable to pay off your full balance.

Debit and credit cards are just two spending solutions that can help you to manage your money. Which option is best for you? The choice is yours.

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