What is a credit card and a debit card?



Bank cards are widely used means of payment, in fact almost every adult in Romania owns at least one of them. There are many types of bank cards on the market, but among all cards, debit and credit cards stand out for their multiple advantages. Both types of cards are similar in that they can be used to pay or obtain cash, and differ in how they are used and the fees associated with them.

In the following article, you will learn important information about what a credit or debit card is, how they are different, and their advantages for those who own them.

1. What is a debit card?

A debit card is essentially a way to withdraw money from a personal account. With its help, multiple payments can be made online through the point of sale within the amount available at any given time, or cash can be withdrawn from an ATM. A bank account linked to a credit card is usually funded by money that various people earn each month in the form of salaries or other payments. The advantage of this card is that it is easy to obtain and the commission generated by the issuance is very low or even non-existent.

Banks offer debit card users the possibility of overdraft, more precisely, the possibility of using from 1 to 6 salaries before the date of collection of the monthly salary. One downside to this tool is that only the individual’s money can be spent, and when the account is empty, the card is useless.


2. What is a credit card?

A debit card is a shopping card. It can be fictionally compared to a friend who will lend you money when you are in urgent need of money, when you cannot wait for the date of receiving your monthly salary. By debit card we refer more precisely to a line of credit granted by the bank, to be used when necessary. The amounts available depend on the bank’s policy, but are generally aligned with the monthly income received by the beneficiary.

The advantages of this type of loan are numerous and more and more Romanians are using it to obtain the funds they need for various expenses. These benefits include:

    • the availability of the line of credit at any time;
    • the existence of a grace period of up to 65 days, during which the money can be returned without any interest;
    • the multiple ways to repay the money in installments (generally there is a minimum monthly payment of 5% of the total value of the loan);
    • Most credit cards offer the user the option to buy different products in installments without any interest.

Credit cards also have some drawbacks and can be very expensive if used irresponsibly. The issuance and annual management commissions are higher than those of debit cards. Another disadvantage is that the handling fee is relatively high. If it is an ATM withdrawal, it is recommended to use the ATM withdrawal directly. Significantly high interest rates should not be overlooked when payments are late beyond the contractual grace period.

3. Which is the right choice: credit card or debit card

The battle between credit and debit card advocates continues, with everyone defending one side or the other. Most experts recommend using both cards, each with its advantages and disadvantages. For those involved, it is best to use the current method of debit cards to settle payments, but at the same time use credit cards for those contingencies where large amounts of funds are urgently needed.

In short, knowing the information related to this type of card can save users unnecessary expenses and even help them solve simple or difficult situations they encounter on a day-to-day basis.

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