Difference between credit and debit

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Both credit and debit accounts, are part of our daily life, and it is that as time passes, the alternatives for payment have been changing, being the credit and debit card favorites. One of their main advantages is that they allow us to enter our money practically perpetually, thus facilitating many of the payment processes that are carried out. Another advantage that banks offer us through these accounts is the ease with which we can manage our funds.

But even if we have made use of this There are types of accounts la oportunidad de que no sepamos con claridad las diferencias que existen entre estos dos tipos de cuentas, así como la oportunidad de que no estemos sacando el máximo provecho de ellas. Por eso en este post abordaremos claramente y concisa cuáles son las diferencias que existen.

Payment methods

The first difference to mention is the Payment methods to which they allow us to enter. Each of the accounts gives us different possibilities, these are some of them.

Debit

Let's start by talking about debit accounts, which allow a payment that is charged directly to our savings account or to our checking account. From this dynamic it can be concluded that the payment limit that we can make is according to the fund of our account; To give an example, we must say that if we have entered the equivalent of 100 euros in our account, our maximum feasible payment is 100 euros.

In a way, payment can be equipped with debit card for cash payment, where our maximum spending is the money we have at our disposal. So, to make a larger payment, what we must do is increase the funds in our accounts.

Credit

In the case of Debit we refer to a payment method in which the collection of a purchase is deferred until the following month. And it is essential to mention that this payment can be made even if our accounts do not have funds.

Here we must explain 2 points; the first is that the payment method he is practically borrowing from the bank. Therefore, we are obliged to pay for the purchase within a specified period. But in order for us to cover the payment of our debt the following month we must have a certain level of income, this is where we clarify the second point.

For the bank to make sure we can pay debt on time pone un límite al «préstamo» que se nos hace en el momento de realizar los pagos. Y para entender cuál debe ser ese límite, el banco se asegura de estudiar la viabilidad del client, para poder establecer si el cliente tiene solvencia financiera y cuál es el nivel de esta solvencia.

It is way to pay It is quite useful when obtaining goods at a time when we do not have cash or to be able to cover an unforeseen event that has not been planned in the budget, but what will not change is that the money must be returned, and this is You can do it in 3 different ways, let's see what they are.

• The first way to pay the credit is at the end of the monthThis means that the payment must be made on a specific day of the month following the purchase. This means that, if we buy something on January 20, the payment must be covered, for example, on February 15. To comply with this payment it is essential that we are very clear on the day on which said payment is due. Otherwise, we must pay attention that we will be charged penalties and could lead to sanctions.
• The second way that we can make the credit payment It is through a percentage, this means that each month that follows we will have to pay cash to cover the total cost of the purchase. Taking an example if we make a purchase of 100 euros, during the next 5 months we will have to pay 20 euros to cover the total amount; So that this does not generate an extra cost, we must be well informed of the conditions that the bank proposes for this type of payment.
• The third way that exists for make the credit payment es mediante una tarifa fija; Este método además se conoce con el término rotatorio; y es un método interesante que posibilita al Username tener un mayor control sobre su presupuesto, dado que en esta circunstancia debemos pagar una cifra que ya está definida. De esta dinámica logramos controlar los gastos y evitar que gastos imprevistos hagan un cambio brusco en nuestras finanzas personales.

Financing

In the previous section we possibly recognized that the credit enables the financing of our purchases. This difference between credit and debit is one of the most recognized, despite everything we will explain it in a more direct way.

When we make a purchase with our credit card, we disburse the total amount of our purchase. In such a way that if we had 100 euros available in our account, and we made a purchase of 20 euros. Our total funds would be 80 euros. The main advantage of this is that we do not incur any debt and at the same time we avoid the possible interest generated by the credit.

On the other hand the credit card would allow us to make the payment of the same account of 20 euros, but on a deferred basis, maybe for 5 months we would pay 4 euros per month. The main advantage of the credit is that by not disbursing the total amount since the payment is made, we will have funds that can be used to cover expenses that were already planned, and even gives us the opportunity to pay off some other debts.

It is very important that we emphasize that both cards have their advantages and disadvantages, so neither is by itself better than the other. However, it is very important that we learn to control our expenses to understand what type of payment is the best for our situation.

Let's take a real example.

Yes our monthly income They are 600 euros, and in our monthly budget we require 450 euros to cover our needs such as clothing, food, services, etc. That leaves us 150 euros that we can use for practically anything we want. In the first instance we have to ask ourselves if it is better to spend the 450 euros through debit, which would only leave us with a fund of 150 euros, on the other hand if we finance the 450 euros we may have to cover them. in 9 payments of 50 euros per month.

If we extend the example for the next 9 months, it will result in us that we have a fund of 2,700 euros, our monthly payment will be 450 euros, and it is in the 10th month that our finances stabilize; and at the same time, we must not forget that each month we collected 150 euros which were free, from this dynamic we have a free fund of 1500 euros, and this will increase by 150 euros each month without affecting our finances.

Until now, the financing seems a possible option, and in fact it is, because we would not only have our savings of 1,500 euros, but an amount of 2,700 euros, which even when they are already destined to cover our monthly expenses, can be used in an emergency.

But before choosing whether this is something useful or not, we must think about our own financial habitsWell, remember that the example was calculated assuming that we had good habits to save the 150 euros that we had left over.

Al mismo tiempo, asumimos que no gastamos nada de los 450 mensuales, pero lo ahorramos para poder cubrir los fertilizantes. Entonces, si no tenemos buenos hábitos de ahorro, o somos persons que ciertamente gastarán ese dinero en vez de juntarlo, es factible que el final no be tan esperanzador, y que no nos sometamos a algunas dificultades económicas.

The interest

Another fundamental difference that exists between credit and debit is that credit usually generates a collection of interests by the banking institution. In general, the amount of interest depends on the term in which we want to cover the payment, if it is longer the interests are generally higher even when the interest rate is the same.

The latter is due to the fact that there is a compounding period, so in order to perform the calculations correctly we must request both the interest rate and the compounding periods in which we have to make our payments.

On the other hand, in debit accounts There is no interest, but in some cases a commission can be paid for having our account in said bank, this is also very important that we ask our advisors.