The Limited Times

Now you can see non-English news...

Credit vs debit card: in which cases it is convenient to use each one

2021-05-07T10:35:26.841Z


Is it better to buy in cash or in installments? What are the advantages and disadvantages of the two means of payment and keys to take advantage of opportunities.


Silvana Saldisuri

05/06/2021 6:01 AM

  • Clarín.com

  • Services

Updated 05/06/2021 6:01 AM

The

pandemic

Covid-19 has impacted on the way

of buying and paying

for Argentines.

Thus, during the last time the use of

debit cards gaining ground to cash, and also the use of Now 12 with credit cards, according to a private report. 

Inflation in April was around 4%, and prices rose 40.9% in the last year, according to recently published data from the Consumer Price Index (CPI) by consulting firm Orlando Ferreres.

Against this background, in order to reduce the impact on the domestic economy, it is important to know the main characteristics of both the

credit

and

debit card

 and what are the best ways to finance yourself to take advantage of opportunities.

The pandemic had an impact on the way Argentines buy and pay.

Photo: Clarín Archive

Debit card vs.

Credit card

The main difference between

debit and credit card

is that the first is always associated with the balance that the customer has in the bank account, while the credit card allows you to operate with money loaned by the financial institution.

When money is withdrawn from an ATM with a debit card or a payment is made with it, the amount of the operation is

automatically deducted

from the balance of the associated account.

In fact, if there is not enough balance to carry out the operation, it will be denied.

On the other hand, when the credit card is used, the bank is the one that is lending the money.

That money will have to be returned the following month or in several installments (installments), which often have an interest.

One way to finance yourself with your credit card is to make purchases for the month the day after the account statement arrived.

Photo: Reuters

In this case, the financial institution advances the money regardless of the balance in the account.

For this reason, before granting a credit card, the bank studies the viability of the client, making sure that it is solvent.

Even so, the credit card

has a limit

.

What are the credit card payment alternatives?

1) Pay the total:

the sum of all the installments for that month is paid with interest included, if any, plus administrative expenses of the bank.

Paying in full, means that what was agreed between the card and the client is being fulfilled 100%.

2) Pay the minimum:

the bank gives the option of making a minimum payment, if all the money necessary to make the total payment is not collected.

This option involves paying additional interest to the original, which will be calculated based on time and the amount owed.

It is important to know that, if at least the minimum is not paid, the card will be blocked.

3) Partial payment:

in the case of having more money than the minimum to pay, but you do not have the necessary money for the total payment, there is the possibility of making partial payments.

The difference between the total payment minus the partial payment will be the new outstanding balance.

Once it is paid, the next summary will show interest, which will be calculated based on that amount and how long it took to pay off that outstanding balance.

Advantages of paying in cash

  • The cash payment can be made in

    cash or by debiting it

    from a checking or savings account.

  • You do not have to be aware of expiration dates to

    pay the card summary

    .

  • Future

    debts are eliminated

    .

  • Cash purchases sometimes offer

    more discount options

    .

  • There is no

    interest

    charge

    .

In recent months, the use of debit cards has skyrocketed, gaining ground on cash.

Photo: Reuters

Advantages of paying in installments

  • It is an alternative for those who do not have enough

    money

    to purchase goods or services that cannot be postponed.

  • By being on time with your debt payments, you are building a

    good credit history

    , which opens the doors for you to have future credit and build a good name as a debtor.


  • Paying in installments can help to alleviate the personal economy and not to get rid of the cash all together, as long as the own level of indebtedness is managed very well.


What are the current opportunities to finance purchases?

Credit:

One way to finance yourself with your credit card is to make

purchases for the month

the day after the account statement arrived.

“In this way, there will be an additional 30 days for the summary to arrive again, plus the 10-day deadline to pay it.

In total, it will be 40 more days to pay that monthly expense account.

If the current inflation is in the order of 4 and 5%, then it is possible to

save

in that period

between 6 and 7%

, only for that administration in the payment ", explained to

Clarín

the economic analyst and director of Focus Market ,

Damien Di Pace

.

“In the case of financing the

'Now 12' plans

, it continues to be the most sought after for durable goods, especially due to the value of the quota in relation to the evolution of inflation, and the improvement in income in a relative way over time. .

In short, it has an

interest rate

and a

financial cost that is

well below the rest of the credit card operations, ”he said.

"Although

retail sales

grew in year-on-year terms after the strict quarantine, they fell in real terms with respect to 2019. Therefore, to encourage consumption, there are currently

offers, promotions and discounts in 3 and 6

installment

plans

that are to be taken advantage of" Di Pace noted.

Debit:

The use of debit cards has grown in recent times as it has practically become a requirement in order not to manipulate physical money, and because there is an

important stimulus

for its use by large supermarket chains.

According to the economic analyst specialized in consumption, "

during the week

, which is when there is less flow of people within these chains,

discounts

are offered

with different debit cards of

10% and up to 15%

, if any card is also added. of loyalty of the chain.

Therefore,

from Monday to Friday,

it is advisable to use the debit card to

buy food

”.

LN

Look also

Increase in light: which are the appliances that consume the most and how to lower their impact on the bill

Earnings: how often it is convenient to present deductions to be able to beat inflation and pay less

Source: clarin

All news articles on 2021-05-07

You may like

Life/Entertain 2024-03-26T09:04:47.110Z
Life/Entertain 2024-03-25T15:16:58.208Z

Trends 24h

News/Politics 2024-03-28T06:04:53.137Z

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.