In the early 90s credit card made its appearance which was later followed by debit card. Both these cards gained popularity with the single term ‘plastic money’.
A debit card is similar to cash as in both scenario money is getting transferred from you to the seller. The only difference is that cash is physical money whereas debit card transfers the amount electronically to the seller’s bank account.
Credit Card is completely different from the debit card. In this, the money is transferred by the issuing bank to the seller. In return, you pay back the amount with each month’s bill. It functions as a short term loan.
Instances, when a credit card can be used, are:
a) In the scenario of low balance in bank account credit card may be the only option. But make sure to use it for only essentials and not more.
b) When you are sure that you will pay back the complete bill on time then you can take some liberty of using the credit card offers.
c) A credit card can also be used by you for improving your credit score. It is an important parameter of determining the rate of interest for the loan. Using card judiciously and paying off each month will increase your credit score.
d) You can also use the credit card to earn rewards and discounts available on that card.
Read more in detail: Financial Tip: Which Card you should use frequently