Ok here’s a million dollar question. When you pay for something over $20, which method of payment do you use?

a) Cash b) debit card c) Credit card and d) what’s the difference

Answer the question before you move on. Now if you have chosen either a, b, or c, I wouldn’t blame you as long as you know how they work and their consequences. But if you have chosen d) it is more likely that you are in financial trouble.

The difference between a credit card and a debit card is a simple idea. However, many people tend to think they are the same because they act the same and are made out of plastic. If you’ve been thinking on these same lines, this article is especially for you.

When you use a debit card, you use your own money. Meaning it comes straight from your account and for whatever thing you buy out using the debit card, your account is debited (usually the next day). When buy an item using the credit card, the money is being borrowed from the bank or Credit Card Company. Therefore, every time you use that credit card, you owe the bank and paying the debt becomes an obligation under your belt. What’s worse is that credit card repayments involve an interest and if your lucky enough, you will make the payment on time; if not, you will end up paying late payment fee too.

None of these cards will help you save money. But if you ask me what the better option is, I’d choose debit cards because with that, what you use is the money that you own, not money that you borrow, as in the case with credit cards.

So be alert about which card your fingers pick, next time you go shopping. The bad habit tendency of shopping with a credit card is that you can buy everything you want and everything you don’t want using somebody else’s money that is generously lent to you for a fraction of a second. Once your credit card goes swiping through that machine, you end up with endless debt which sometimes, you cannot even bare. So be mindful when you use those cards!