Credit vs. Debit Cards - E-Payment System, E-Commerce Video Lecture | E-Commerce - B Com

whether or not you know the functions of
a credit or debit card you've probably
seen people use them at a mall at a gas
station or at the ATM in our society the
usage of cards has become so prevalent
that almost all businesses offer payment
options of credit and debit cards these
cards contain money that is either
stored or loaned out from a bank in
order to own a debit card one must first
have a checking or savings account in a
bank the money within the account is
accessible to the individual through a
debit card and is deducted every time
the person makes a purchase with the
card basically a debit card is a plastic
substitute for paper money a credit card
on the other hand does not require a
link to any checking or savings account
instead of deducting from one's own
account a bank allows an individual to
loan out some money to make purchases
each time an expense is paid with by a
credit card the bank loans out of sum of
money and makes a record of the purchase
at the end of the month the bank comes
back to ask for the money that was
loaned if one fails to pay back the bank
when the month is up the bank charges a
late fee or an added interest rate which
continues to accumulate the longer
someone fails to meet the deadline being
able to pay back the bank on time with
the full amount of money contributes
greatly to one's credit score which is
extremely important as measurement of
financial stability and credibility
a credit card comes with a credit line
which has a spending limit unlike debit
cards where one can only use the money
within his or her account credit card
users can take advantage of the line of
credit I'll bait up to a certain extent
credit card users do however have access
to a large pool of money that can be
loaned out having said that all the
available money often leads to troubles
with budgeting as people tend to spend
lots of money purchasing goods they
cannot afford this leads to the main
argument for debit cards which is that
since an individual only has access to
the money within his or her own account
it is impossible to overspend as the
money within the account is finite most
people believe that a debit card is
easier to manage and keep track of on
the flip side debit cards are known to
be less safe and more prone to fraud in
addition there are no royalties or
rewards that come with debit cards as
for credit cards the main argument is
that they offer a variety of perks and
rewards to its users given that the user
responsibly pays back the money on a
monthly basis
in addition using a line of credit also
builds up a credit score which is
incredibly important for indicating ones
financial stability of course this also
brings up the issue of human error
whether it be accidentally missing a
payment or overspending on a per the
consequences of irresponsibility are
drastic when using a credit card as
interest rates for late payments or
overdrawn credit lines are extremely
high when considering whether to use a
debit or credit card the first thing to
evaluate is your ability to manage your
money if you believe that tracking
expenses and budgeting is your forte
then credit cards may be an option to
consider however if you believe that
forgetting to pay back loans are
accidentally spending too much our
probable situations using a debit card
would probably be a safer bet hope this
video helped you understand the
differences between credit and debit
cards if you learn something please take
a moment
browse through our other uploads thank
you