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Which is better - a debit or credit card? [Video]

18 January 2016

Today, consumers rely heavily on the use of plastic rather than cash to purchase goods and services, and that trend will only continue.

Many people have both a debit and a credit card in their wallets, but sometimes are not sure which card is best suited to their needs. Each offers its own advantages and disadvantages. A brief overview should help you decide.

Debit cards offer savings options: Many banks offer excellent savings options – so if you have cash to spare, it may be better to keep it in a bank account where it attracts interest. Each time you swipe your card, your purchases will be deducted from the account, but the remaining funds could continue to attract interest and you can also earn rewards.

Debit cards can do what credit cards can: From booking plane tickets or paying for dinners out, they are tremendously convenient.

It is worth noting that store cards and credit cards could encourage you to blow cash that you don’t have and, if you can’t repay the minimum instalment each month, this could get you into trouble. That being said, credit cards do also have certain advantages and can also earn rewards.

The best thing about a credit card is that it gives you access to instant cash: if you are short of money, you can turn to your credit card at any time.

You can also use a credit card to improve your credit score: provided you use your card responsibly and make your monthly repayments on time, you’ll build up a good history and demonstrate that you’re a good risk. This will stand you in good stead should you require credit any time in the future.