Debit or credit? Those who pay for their card purchases often hear this question over and over again. And contrary to what many people may think, the answer to this rather than recurring question is not that simple. Many other questions may come from this, with answers that can impact (and greatly) anyone’s financial situation.
Because we decided to prepare this content precisely to answer these questions and point to the benefits of each option. In addition, we will present an alternative for those who need to go beyond credit or debit. Curious? So good read!
Why use credit card?
The credit card operation based on a limit made available to the customer by a financial institution through prior analysis that evaluates various factors such as income and the user’s consumption history. Once purchased, the average consumer has up to 40 days to pay the amounts spent, which happens through an invoice.
Credit card has some advantages. Most have points programs, which accumulate according to purchases made. Once collected, these points can be redeemed for products, services and even airline tickets! In addition, buying on credit also allows the interest-free installment of purchases.
The problem is that the credit card gives a false impression of increased purchasing power, which can be a trap. After all, this misleading feeling makes many spend more than their current ability to pay. Like the interest Credit card charges are very high for those who do not pay the full bill, this can result in a complicated debt.
Finally, you need to be aware of the annuity charged by the card administrator, which can be very salty. Did you know that there are cards that charge less or are even exempt from this fee? If possible, give preference to these options! Not to mention that it is always possible to call at the central and ask for a discount…
Why use debit card?
Debit card operation is simpler: once the transaction is authorized, the purchase amount is deducted from the available balance in the customer’s account. If there is not enough balance, the operation is not completed. In this case, there is no installment and no points are usually accumulated.
Debt is a good alternative for those who find it difficult to control their purchases, because you can only spend what you have. It is also a safer option than carrying cash. In addition, many stores offer discounts, however small, for purchases paid through debit.
Are there options besides debit or credit?
Now you know what are the biggest advantages and disadvantages of both credit and debt, we come to the bonus: after all, what options are there besides these to make purchases, especially of higher value goods? For a reliable and simple alternative available on the market is consortium!
In a consortium, you make payments of installments which will eventually entitle you to a letter of credit. With this letter of credit in hand, you can buy real estate, vehicles and other products, as well as contract services, all as agreed at the beginning of the consortium. And the best: no paperwork and exorbitant interest cartoons!
Now that you have seen how to choose between debit or credit and have known consortium as a great option for purchasing goods and hiring services, just put the tips in this post into practice to value your money!
First, though, how about some reading tips for learning about investing? Read this our other post to know 5 must-see books!