Credit card or debit card during festival shopping, which is better?
The festive season has begun with discounts galore on various shopping sites. Naturally, you must be tempted to go on a shopping spree with the swipe of your card. But have you considered which one of the card in your possession might be beneficial to use during the festive season? Here’s some useful information to help you make that decision.
While shopping in the festive season, it’s critical to equip yourself with the spending instrument that can help maximise your shopping benefits. Credit and debit cards today are the two most preferred ways of shopping. Each card comes with its own set of benefits. To get the best out of those benefits, it’s crucial to understand them.
Debit card vs credit card
A debit card helps you in withdrawing or spending your own money deposited in your bank account. You don’t need to repay the amount spent through the card. On the other hand, a credit card is a borrowing instrument that can be used to make payments or to withdraw money through ATMs as loan. Through a credit card, you spend the borrowed fund which needs to be repaid to the card company or bank within the stipulated period to avoid interest and penalty. Using a debit card has no impact on your CIBIL score, but a credit card can affect the CIBIL score.
Using debit or credit cards during festive shopping
Till last few years ago, the EMI facility for purchases was available only on credit cards. But this facility is now available through certain eligible debit cards as well. However, while using the credit card in most cases, you don’t need any pre-approval or any exclusive offer from the card company to convert your purchase into EMI. So, if you are looking to buy something on EMI, a credit card can be a more comfortable option than debit cards.
Have a look at the reward structure on your credit and debit cards as both can provide reward points, especially during the festive season.
And if you are using a co-branded credit card, the usual rewards and offers are enhanced and you may also win a cash back while using it at certain recognised merchandise. Co-branded debit card facility is not widely available in the market.
While a credit card comes with several benefits, it may also push you towards splurging during festive season. Debit card restrains your spending to the extent of your bank balance. With a numbers of offers in the market to lure the customers, it would be wise to define your spending limit and plan your shopping accordingly.
What you need to know
Festive sales come with grand offers and discounts. If you have insufficient cash in your bank, you can use a credit card to take advantage of festive offers and repay the amount later through EMIs. Many companies offer the EMI facility through both debit and credit cards with zero interest. It would make sense to exercise caution while going for such deals. Do compare the price of the product with EMI and without EMI facility at other merchandise to figure out the exact benefit of such zero cost EMIs.
While using a debit or credit card to make payments for getting the discounts or reward points, you must read the offer’s fine print because sometimes the offer is restricted to select items and on shopping above a minimum prescribed amount. For example, a credit card company offers 10% cash back on the purchase of a particular item on a popular shopping portal, but in the fine print, the maximum cashback has been restricted to Rs. 2000. So it would help if you read the offer conditions very well before spending money for a specific benefit on credit/debit card.
Some benefits of using credit card
-It improves your credit score
-Let’s you avail yourself of many credit card benefits, which in turn helps you save money
-You have the facility of pre-approved loans for immediate fund requirements (if your credit repayment history is excellent)
- Availability of no-cost EMIs (The interest costs incurred on no-cost-EMIs are borne by merchants whereas the cardholders are only required to bear the purchase cost via EMIs)
