The Difference Between Debit and Credit Cards

Before I start, there is some context that you, the reader, need to know about: the history of money. Money is a generally acceptable way of paying. However, money, the way we know it nowadays, hasn't always existed (with coins, notes, and V-Bucks). The main money-related problems throughout history have always been related to how accessible and comfortable it is to buy things.

 In the XIII century, when you wanted to indulge yourself with a good meal, let's say, grilled chicken (and in case you weren't starving to death or fighting in a war, so let's suppose you were a rich kid), you wouldn't be able to pay $30 for the meal you desired. What would you do then? You would take your family´s animals, like cows and chickens, and trade them with whoever is willing to cook that chicken for you. You exchange something someone is interested in to get what you are interested in. So there you are, about to trade Missy-the-cow and Chicky-the-chicken for your favorite meal. The negative side is that it is uncomfortable to always go around with voluminous things every time you are willing to buy something. Imagine how many animals you had to take with you if you wanted to buy a house.

Time after time, society evolved culturally, so coins were minted. However, would you be comfortable carrying 50 coins worth $1 if you wanted to buy video games? No. So then notes were invented in order to carry more value in a simplified way. All in all, the axis in which money has evolved over time is based on how comfortable an x amount of money can be carried with you and used to buy things in a certain circumstance. Therefore, credit cards and debit cards were invented.

What is the difference between a credit card and a debit card?

Credit cards and debit cards are the most comfortable (in terms of simplicity) way to carry your money with you. Have you ever noticed how whenever you go out with your parents and they pay anything, no matter how expensive, they do it with their credit or debit card? An expensive dinner? Just insert your card into the card machine, and the payment is done, easy, and fast. But, what's the difference between them?

Well, even though they are both used to paying for something, the difference relies on how the payment is made. 

Debit cards

When you use a debit card, the funds for the amount of your purchase are taken from your checking account almost instantly. If you have a teen card, see how your bank sends a notification to you regarding how you paid for something whenever you purchase an item. That money was instantly removed from your account and sent to whoever you were paying. 

You usually use this type of card to pay for punctual things, like a sudden whim, or a dinner out with your friends. And, additionally, to enjoy this service, you have to pay your bank a certain amount of money. It's usually not much, so don’t worry. 

Credit cards

It's important to know the difference: Some people think that they are using a credit card instead of a debit card in their daily routine. Remember: you use your debit card MUCH MORE than your credit card. Why? Because of the services they offer. While debit cards pay the total amount of your purchase instantly, credit cards work differently.

This card allows you to purchase for an extended period of time. Instead of paying now, you contribute with a small amount every month, until you have paid the original price. You might say, “Oh my god, it's amazing, why do people use debit cards when you have super-cool credit cards?”. My friend, if you abuse your credit card, you are taking the highway to bankruptcy. Of course, the bank is not going to let you get away with it. Every time you use your credit card, you have to pay interest on the price you have paid. That's because you are using a service provided by your bank. Most banks set a nominal interest rate of 1-2%. 

The situations in which you might find it desirable to use your credit card aren’t many, but the older you become, the more you will make use of credit cards. You might want to use it to purchase something really expensive, like furniture, or a car, and fraction it into small quantities and pay them month-to-month, instead of all at once.

Final Thoughts

We live in an era of consumption. We want something, and we want it asap; but life isn’t about hurrying. The runner might reach the goal faster, but it’s the walker who enjoys the way. 

It’s important to raise a sense of responsibility among the youth about consumption. And you might be asking: but Fran, what does this have to do with credit and debit cards? Well, my dear friend, almost everything. It's important that we spend some of our time fighting for something; otherwise, the money won't be worth spending, since we won't have anything that has motivated us to get that thing. It's important not to take shortcuts; even though you want something, you have to work for it. You can't go and use your credit card just because it will allow you to purchase the thing you wanted faster. Keep in mind that you have to pay interest afterward, so you are just getting into debt.

Credit cards are like a knife; they can be used to chop meat or as a weapon. Depending on the way you use it, it can provide you with benefits in the same way it can get you into trouble with debt. Just remember that everything good is worth the wait. So instead of purchasing something with a credit card because it can be “cheaper at first sight”, develop a sense of responsibility and self-control towards this situation. And of course, have fun using credit and debit cards!