When it comes to shopping online, sometimes it's hard to tell the difference between a credit card and a debit card. And, if you're a woefully uninformed shopper, you might even be confused about the differences between the two.
So, how do you tell the difference between a credit card and a debit card? How do you know if you should use a credit card or a debit card when you're shopping online?
To understand the difference between credit cards and debit cards, we need to first understand how they work. A credit card allows the cardholder to spend up to a certain limit, which is decided by the card issuer. A cardholder can also opt to pay only a certain amount each month, with the rest of the bill paid on installment.
A credit card requires the cardholder to pay for the purchases made with the card by borrowing money from the issuing bank and repaying the amount in full on the due date, along with interest. In contrast, a debit card is a card that is linked to a bank account. The cardholder can spend up to a certain limit that they have set on the account and if they try to spend more, they will be prompted to pay more money.
Is it better to use credit or debit cards?
You don't have to be rich or even have a good credit to get a credit card. You do need to have a good credit score, but you can get a credit card even if you have a poor credit score. If you have a poor credit score, it may be time to apply for a credit card.
There are credit cards available for people with poor credit, but not every credit card company is the same. It is important to find the right card for your situation. If you have a poor credit score, there are many credit card companies that offer bad credit credit cards.
But, if you have a poor credit score, do not apply for a credit card. There are companies that will allow you to build your credit and pay back the money you charge on a credit card without charging you an interest. These companies have no interest credit cards, which is just what you need if you have a poor credit score.
5 Signs It's Time To Upgrade Your Debit Card To A Credit Card
Many people are scared to get a credit card in UAE because they think it’s risky or they don’t want to get into debt. If you’re one of them, it’s time to change your mindset because credit cards can be really useful.
Not only do they give you more spending power, but they can also help you build a better credit score which can be useful for renting a house or buying a car. So, if you’re thinking about getting a credit card, here are five signs that it’s time to upgrade your debit card to a credit card.
1.When you are responsible with your money
Even as a credit card holder, you are aware of the importance of saving money. And, when it comes to saving money, it can be time-consuming to make separate trips to ATM to withdraw cash.
It's not surprising that you're looking for ways to get a credit card in UAE. But, in order to be eligible for a credit card, you need to have an income and a good credit history. You also need to have a bank account with the credit card provider. So, it's not easy to change from a debit card to a credit card.
2.When you don't like the idea of overspending
If you’re the type of person who doesn’t spend impulsively just because you have access to credit, you’re likely to be a responsible credit card holder. It’s important to remember that when you use a credit card to make a purchase, the credit card issuer is actually the one fronting the money for the purchase. You will have to pay back the money you’ve spent plus interest and fees eventually. So it’s not “free” money in any sense.
3.When you want to build up your credit score
There are a few key things you can do to build good credit. The first is to demonstrate to lenders that you’re able to responsibly repay the money you borrow by making sure you consistently pay off your credit card bills in full and on time over an extended period.
Another thing you can do is make sure your credit report is clean and impressive. Banks and financial institutions reference your credit report when deciding whether or not to extend credit to you, and how clean and impressive your credit report is will also affect the amount of credit they are willing to extend to you.
4.When you want to earn tangible credit card rewards
When it comes to choosing a credit card that’s right for you, there are a few things you need to take into consideration such as your lifestyle and spending habits.
Do you like to travel? Then an air miles credit card might be a good choice for you.
Are you a big spender? Then a cashback credit card could help you save money on your purchases. There are also rewards credit cards that offer discounts and points that can be redeemed for prizes or other perks.
5.When you want to enjoy credit cards' fringe benefits
Did you know that credit cards offer more than just the ability to make purchases?
Many credit cards also come with fringe benefits like fraud protection, e-commerce purchase protection, complimentary travel insurance, concierge services, and complimentary airport lounge access worldwide.
However, it’s important to keep in mind that not all credit cards are created equal. The actual fringe benefits that you can enjoy will depend on the specific credit cards you hold.