Making cards your friends

Published Apr 4, 2017 – By Loanstreet


You probably bring one credit card and debit card in your wallet, but it is always hard to know which one to use. What are the pros and cons of each card? When should you use which? We will help you make a smart decision when you need to swipe the plastic.

Which is which?

Let's break down the differences between the two:

Debit card: Acts as digitised version of chequebooks and linked to your personal bank account.
Money is withdrawn from the account as soon as the transaction happens.

Credit card: Offers a line of credit that is interest-free if the monthly bill is paid on time.
Connected to the bank that issued the card, and you go into debt to the card issuer.

If you're a foreigner reading this, and you're interested to know whether you're eligible for one in Malaysia and how to go about the process, you can read more about it right here.

Why use the one instead of the other?

1) Use a credit card to...

Do you like online shopping? Then you should know that credit cards are the most secure choice for online payment because it provides you extra protection against fraud and makes refund easier.

Moreover, credit cards are better option when you make large purchases, especially on electronic products. Be smart and pay your TV and computer with your credit cards to get benefits like extended warranties and extra perks like price protection.

Remember to bring your credit cards along when you go for vacation! It will open up surprises like travel insurance and exclusive discounts. Besides, most car rental companies and hotels only accept credit card reservations.

2) Use a debit card to...

Need to do a fast transaction or payment? Use your debit card if the other party needs to be paid immediately as debit transactions are handled almost instantly.

You can use your debit cards as many times as you want, as long it still has cash in your account. You won't incur overdraft fees, and also won't be paying interest on bills, thus helping you to watch your finances and keep you better financial health.

If you need the actual currency in a country that's not your own, your best approach for currency exchange is to use your debit card and hit the ATM. When you do, you will get the "wholesale" exchange rate, which is reserved for interbank purchases.

Types of credit cards

You are probably carrying one now, a standard credit card is a starter card for applicants with little credit history who meet the minimum required criteria.

Moreover, you can enjoy rewards in the form of cash, points or discounts if you always use a reward credit card.

Have a bad credit history? You probably need a secured credit card to help you reestablish good credit.

There is also a charge credit card which does not limit your spending, but the balances must be paid in full at the end of each month.

With that brief idea in mind, make sure that you choose a credit card that actually suits your lifestyle. You wouldn't want a piece of plastic that gives you heaps of benefits that you are unable to enjoy just because your spending habits don't qualify you for it.

Types of debit cards

Did you know that a PIN-only debit card is linked to your bank account? Furthermore, you are the only one who can use it as you need to enter your secure PIN number.

Besides, you can also opt for a dual-use debit card which is also directly tied to your bank account, but both signature and PIN number can be used for cash transactions.

If you’re purchasing at participating retailers, use the Electronic Benefit Transfer (EBT) debit card to withdraw cash from an ATM.

The prepaid debit card provides you access to funds deposited directly on the card by you or a third party (it also works like a gift card!).

In conclusion, here's a short recap regarding the two cards:

1) Go for a credit card if…

You're doing online shopping.
You’re making a large purchase.
You’re booking for a travel plan or are on vacation.

2) Go for a debit card if…

The other party needs to be paid immediately.
You're watching your finances and recovering from poor money management.
You want the best exchange rate on foreign currency.

Additionally, you can refer to this handy guide on how to tell apart a credit, debit and charge card for more in-depth information.

This article is brought to you by EasyUni.my, Malaysia’s first and largest online portal. EasyUni offers a comprehensive and complete platform for college and university applications for school leavers and working adults with over 70,000 courses and programmes from 2000 colleges and universities across more than 20 countries.