Credit or debit card, which is better?

“Is it credit or debit?You've probably heard this question frequently when you go to pay for your purchases at a store. But after all, which is better: using credit or debit?

This question is more common than it seems and it makes sense, after all it is based on: what is better, to have no money in the account now or to wait to pay when the bill arrives?

The problem is that these two shopping methods are present in our daily lives, and we often end up using them without really understanding how they work. And that's wrong! 

From the moment we leave the phase of ignorance and understand each step we take in our financial life, we have the possibility of using money to our advantage and not remaining hostage to it. 

Therefore, in this post we want to help you better understand how it all works. 

Here you will check:

• What is the function of a credit card?
• What is the function of a debit card?
• Between the two options, which one is better?
• Essential tips for using your credit card

What is the function of a credit card?

A credit card can be compared to a loan with a 40-day repayment term. Therefore, to receive the benefit of having available credit, financial institutions conduct "screening" using elimination criteria. 

For example, to have a credit card, you need to have a CPF (Brazilian Social Security Number) with no debts, a good credit score (which is what determines whether you are a good payer or not), a fixed monthly income, and some other factors that vary depending on the company. 

All of this is analyzed because the credit card offers certain benefits, such as making purchases in installments, participating in mileage programs or other programs that offer benefits to those who use the card. 

Therefore, a person who is considered in default, that is, a bad payer, will hardly have access to this type of credit. 

How does the credit card limit work?

As mentioned, in the form of a loan, the bank gives you a credit card limit so you can make purchases. 

In the case of installment purchases, the total purchase amount is committed to the card, however, the installments are distributed over the months as agreed by you at the time of purchase. 

And the tariffs, how do they work?

Many cards do not have any maintenance fee, while some do.

There are also additional charges if a new card needs to be issued. In this case, you should check with your card issuer to learn how these charges work. 

So when you end the month, the bill arrives

Also known as “the card has changed, I can now make purchases”, or “how am I going to pay this bill?”

This moment is loved by some and hated by others. 

The invoice details all your expenses for that period, including cash purchases, installments, recurring purchases, etc. 

Some companies offer the option of paying a minimum bill, where you pay a nominal amount to avoid outstanding debts, and the bill rolls over to the following month. 

But be careful, it seems like an advantage, but the amount accumulates with interest and you end up falling into a trap, getting stuck with several and several installments. 

Whenever you pay your bill in full and within the due date, your limit is returned to you and financial institutions consider this action to be a good payer. 

Yes, paying your debts on time helps to increase your score.

What is the function of a debit card?

Unlike a credit card, a debit card is linked to your checking account, and it's how you use your account balance, as each purchase is debited immediately. It's simply a channel to connect you and your money, and it offers no additional benefits. 

However, some banks release an amount corresponding to the special check into the account of good payers, which is money from the bank that you can use for a few days, if the bank account is empty. 

Using a debit card is more about the security and convenience of not having to go to a bank and withdraw money than the financial benefits themselves. 

Additionally, you can check your usage directly in the bank's app, which displays a statement with all your transactions.  

Between the two options, which is the best?

According to the Serasa economist, Luiz Rabi, The secret to knowing whether it is better to use a credit card or a debit card is simple:

• Below R$ 50.00, choose debit
• Above R$ 50.00, opt for credit

He explains that by using credit this way, you don't lose the money you have in your account and you can organize yourself to pay the bill. 

It is a simple and easy to apply formula. 

It's just important to remember that, eventually, the bill will arrive! It's not wise to put EVERYTHING on credit thinking that you'll "figure it out" later to pay the bill. 

Essential tips for using your credit card

With that in mind, we've put together some essential tips for you if you want to have good financial health and avoid being held hostage by banking institutions. 

• Spend on credit only what you can afford
• Don't fool yourself with high limits, set your own limit.
• Think carefully before making a purchase: “Do I really need this?”
• Understand if your choices are made on impulse
• Have good financial planning
• Choose cards with no annual fees or abusive fees

And enjoy the benefits that a credit card can offer you!

Did you like the content?

We hope your question has been answered. From now on, make the most of these two options! 

Take the opportunity to read too “Credit card or payroll loan: which is better?”. Keep following our content and following these tips carefully chosen for you.