Payment cards began to appear in Ukraine in the early 90s and during this time evolved from ordinary plastic with a magnetic stripe, from which you could only withdraw money at an ATM, to a securely protected payment instrument that allows you to pay at every step. Today, they are the most demanded banking product, without which it is already difficult to imagine one's life. According to the form of service, payment cards are divided into debit and credit cards. In this article, we will consider what a debit card is, what are its features and differences from a credit card.
What does a debit card mean?
Debit cards are bank payment cards for depositing, storing and spending one's own money without the possibility of using credit funds. Simply put, it's your cashless wallet, and you can't spend more than what's in it.
Debit cards, first of all, are issued for the regular transfer of funds from enterprises and institutions - wages, pensions, scholarships, social benefits. Like any other, it has the following functionality:
- storage of funds;
- withdrawing cash from ATMs;
- payments at points of sale;
- card payment online on the Internet;
- payment of utilities and communication services;
- making fund transfers.
Some banking institutions also offer the possibility to receive interest on the balance of own funds, which makes your payment instrument also economical and allows you not only to spend, but also to earn additional income. For example, MRIYA from Agroprosperis Bank allows customers to save up to 8% per annum on daily balances. The peculiarity is that funds can be withdrawn at any time without losing interest.
Credit or debit card
Any card, regardless of the service scheme, has the same functionality, technical characteristics, technologies and level of security. With each of them, you can pay online and offline, manage in online banking, connect to online wallets, withdraw cash, make payments and transfers. The differences between a debit card and a credit card are as follows:
Availability of a credit limit
The main difference, of course, is that the credit card has a credit limit and gives the user more financial options. Instead of spending several months to accumulate funds, you can immediately purchase the desired product and use it now. Most cards provide a grace period, during which you do not have to pay interest for using the borrowed funds. This term is usually up to 62 days. Provided that the funds are returned before the end of the grace period, you have the opportunity to make the desired purchase using credit funds without additional costs.
Tariffs for service
The second important difference is the amount of fees for transactions on a card account, which are usually much less attractive for credit cards. For example, a significant fee may be charged for withdrawing cash from an ATM, especially when withdrawing credit funds.
Discovery availability
And, finally, it is important to understand that unlike debit, not everyone can get a credit card. Banking institutions analyze the client's credit rating and the level of his income and decide on the approval of the credit limit and its maximum amount. The rating is influenced by age, social status, amount of official income, availability and quality of credit history. For example, if it is not there, then at the first stage, the size of your limit will be minimal, and conscientious compliance with the terms of using the credit limit will help to gradually increase it.
What option to choose
If you're not sure which option is best for you, here are some tips to help you decide:
- Financial discipline. If you're looking for a convenient way to manage your own money and avoid debt, a debit card is definitely the best option. It allows you to spend only those funds that you already have in your account, without the risk of going into debt.
- Credit history. If you need to improve your credit history or increase your credit limit, a credit card can be helpful. Making payments on time can improve your credit score.
- Bonus program. Credit cards often offer various bonuses, such as cashback, bonus points or loyalty programs. If you are interested in such benefits, then this may be a better choice.
- Risk of overspending. It is important to remember about exceeding the credit limit or late payment of its body and interest, which leads to fines and accrual of interest on the debt. In the absence of cost control, this can worsen the financial situation.
As you can see, different types meet different needs, so in many cases it will be appropriate to have both banking products: debit for making payments and receiving funds, credit for making profitable purchases and receiving bonuses.
Credit and debit card
What it is is clear from the name itself. Such a payment instrument combines both functions and allows the owner to spend his own funds that are in his bank account, and also has a certain credit limit that allows him to spend more money by borrowing it from the bank.
Thus, they combine the convenience and reliability of debit cards with the possibility of expanding financial opportunities due to credit functions. This makes them popular with customers looking for more financial flexibility and convenience in their daily money transactions.
It can be a debit card with the possibility of opening a credit limit or, on the contrary, a credit card, but with tariffs for using one's own funds at the level of a debit card. When choosing such a product, first determine which of the functions is more important to you, and then compare rates first for the priority function.
Any Visa debit card from Agroprosperis Bank provides an opportunity to set a credit limit of up to 300,000 hryvnias with a grace period of up to 62 days.
