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Credit & Debit Cards vs Cash

Credit and debit cards are powerful tools that offer simplicity, security and convenience. You can swipe away your purchases, from movie tickets and groceries to utility payments and online shopping. Take a look at how plastic money is better than carrying cash.

Ease of use and convenience

With credit cards, you are using the bank's money up to your credit limit. The amount you use, has to be paid back to the bank. If you pay your total outstanding before the interest free period ends, you incur no charges. If not, like any other loan, interest is charged.

Debit cards on the other hand are a way to access the funds in your bank account with ease. You can also use it to spend at a merchant outlet, withdraw cash or make an online transaction.

Secure transactions

When you own credit or debit cards, you don't have to worry about carrying wads of cash in your wallet. Now with chip cards and pass codes, they offer secure transactions. So if someone steals your wallet or you lose it, all you have to do is call the bank and block the cards. No harm done.

With growing crime rates and increasing dependence on online transactions, it becomes imperative to move from cash to plastic.

Reward points and incentives

Both credit and debit cards and especially co-branded ones have excellent reward programs. With every spend, you accrue points and you can redeem them for free fuel, lounge access and reward points at retail partners, air miles, cash back and much more.
So when you use cards, you get back a small amount of what you spend.

Deals and discounts

Consumer offers in the form of discounts, free products, gift coupons etc., at both online and offline retail partners are a regular feature for credit and debit card users. Sometimes, cardholders get deals over and above the discounts offered by online and offline merchants.

Spending limit

Both credit and debit cards have limits to which you can spend while using them. Debit cards allow you to spend from your bank balance within the daily limit set by the bank. With credit cards, your spending capacity is not limited by your bank balance. However, you will have to keep track of your credit limit, to ensure you don't spend beyond it.

Charges

Plain debit cards do not incur any charges, whereas branded debit cards have annual fees.Some credit cards have joining fees and annual fees. Interest is charged when total outstanding is not paid in full before the interest free period.

In the end, it comes down to your choice on a case-by-case basis. It is about how you can manage the money that you have in your account and the money you are ready to borrow and are capable of paying back. You might want to get more rewards and prefer to use one type of card over the other. Whichever card you pick, using cards is smarter and more beneficial than using cash.