Financial Literacy

What’s the Difference Between a Credit Card and a Debit Card?

This post is originally shared inside Traders Lounge Facebook group by Gandakoh in the hope of  increasing financial literacy. This article includes some comments from TL members kind enough to share their knowledge.

The key difference between a credit card and debit card lies on where the money used for payment is taken from.

  • Credit card – ang pag gamit ng credit card ay pag utang ng pera sa banko para ipambili ng nais mo bilhin. May iba ibang limit ng pera na maximum mo na magamit ang bawat credit cards. Ang total na pera na pwede mo magamit ay nakadepende sa iyong credit card limit. So, dahil ito ay utang sa bank, kailangan mo bayaran ito bago mag JUDETH (due date).
  • Debit card – ito naman ay extension ng iyong savings account or checking account. Ang pag gamit nito ay pag gamit din ng pera na nasa iyong savings/checking account. Wala kang uutangin na pera sa bank but kung ano yung pera nanasa account mo ay yun din ang gagamitin mo. May maximum daily amount ka lang na pwede gamitin. Depende sa bank meron 20k maximum meron din 50k maximum per day.

0% installment is a standard feature among credit cards in the Philippines. You can pay for your purchases in more manageable amounts over 12 to 24 months instead of making a one-time full payment.This makes a credit card ideal for buying items you normally can’t pay upfront in cash, such as gadgets, appliances, and furniture.

Sa online shopping naman mas safer ang credit card. You can use both credit at debit card but mas safer ang credit card in theory since utang mo ito sa bank and the money is not yours. Banks made credit cards have more protection din. If you used debit card at mahack ka and someone used it for any transaction matic bawas sa pera mo yun since debit card is taking from your savings/checking accounts. In contrast, an unauthorized transaction charged to a credit card is quite easier to deal with. It’s technically the bank’s money—not yours—that’s stolen. Reality naman kapag magaling ang hakcer it don’t matter kung credit or debit ma hack niya pa rin.

Travel-Related Bookings – kapag gamit mo ay debit card matic na kuha agad pera yun sa savings/checking accounts mo while if credit card gamit mo magbook ng travels, utang mo muna sa bank. In one way, if debit card gamit mo, bayad ka na agad. Sa isang banda, if credit card gamit mo di mo pa nga bayad agad but yung pera mo naman di nabawasan so pwede mo pa magamit sa mga mas needed na bagay.

The Auto-Debit Arrangement feature of a credit card helps you atutomate payment for your bills and other recurring charges such as  insurance premiums. This way, you avoid missing a payment and the hassles that come with it.

Ingat lang din sa pag gamit ng credit card especially if you fail to pay on time kasi lahat ng banks nagrereport yan ng files mo. The bank reports your credit card payment history, credit utilization ratio, and the age of your credit card account to the credit bureaus. Such data are used to compute your credit score. Here is a link sa credit card bureau to learn more.

DEBIT CARD NAMAN DAHIL DIRECTLY SIYA KUMUKUHA PERA SA SAVINGS/CHECKING ACCOUNTS MO AY MADIDISIPLINA KA PAGDATING SA PERA. KAPAG ZERO NA PERA MO ZERO NA TALAGA. MAS NAILIMITAHAN ANG IMPULSE BUYING.

Debit card naman dahil directly siya kumukuha pera sa savings/checking accounts mo ay madidisiplina ka pagdating sa pera. Kapag zero na pero zero na talaga. Mas nalilimitahan ang impulse buying.

Sa lahat ng traders na may karagdagang information about credit cards, kindly comment nyo dito. Gawin nating gold mine ng information itong post na ito. Sa mga TL family that is working sa banking, kindly help us with giving out more information. Thank you so much!

Top comments from TL family...

“I prefer cc also. Add ko din mam. Find credit card the best suites you, like cash rebate, store discount and rewards points. I think the Main downfall for credit card is kung hinde ka marunong magmanage ng finances mo its easy to overspend and max out the card limit kahit 0% interest pa yung binibili mo.”

-Sai Ba

“Here is one tip! Since yung iba online transaction na like online banking na kailangan mo lang mag connect sa internet. Wag ka mag online transaction sa phone mo kapag di mo alam saan galing ang internet. Better kung internet ninyo sa bahay or data sa phone mo. Kasi hackers they can access your online transactions kapag naconnect ka sa internet they provided.”

-Flip Nay

Pwede rin na pag 2 or more credit cards mo, call customer service ng isa doon and tell them that you what to cancel that particular credit card kasi you still have another at ma annual fee kasi kaya icacancel mo kamo. They will offer to waive your annual fees. And then call your other card company and do the same thing.

Just be sure that you are not bluffing at if d inoffer sau , eh ok lang.

We have BPI credit cards and have been with them since 1990s, lifetme na kaming waive ang annual fees since late 1990s.

Never did we pay for annual fees. Just call them kasi mas madaling mag retain ng clients rather than convince people to transfer to them. Try it!.”

-Phoenix Eagle

Tip: Charge everything you can to your credit card. Para may points. Lahat ng gastos mo na supposed to be from savings mo babayaran. Then keep the money until bayaran na ng due date.

This way credit card companies will see that even tho you have high spending pattern you could still pay in full.

With this mataas possibility na iraise ng bank yung credit limit mo. This is very helpful lalo na if you plan a big purchase.

You can even apply for your credit limit to be converted to cash and be paid on a monthly basis (sample use is pag bibili ka ng property ang you need that downpayment.

You can pay the monthly rate pero walang pang downpayment.).

Another benefit is having some perks. There are cards with specific perks like discount sa car services or parts, travel discounts/priorities, access to airport lounge, priority lines sa supermarket , etc.

If you have multiple credit cards, you may also benefit from their credit transfer program. If you want your balance from a credit card to be transffered to another card with lower or zero interest pwede sya. You just need to check ano rates and promos offered by your card.

And finally, you can use your credit card as cash! Yes! Pay maya allows credit cards as source for funds and with the pay maya card you can withdraw it. This could be very helpful if sasahod ka next week but you need to avail something because of a discount and available lang sya on a cash basis. No interest on this (Only one time charge of i think 25 pesos per transaction)pay in full.”

Kevin Kier Ona Amandy

Tips:

• If you’re afraid to use cc for online transactions, use PayMaya instead. Lalo if malaki na ang credit limit ng cc mo. If ma hack man ang account mo, limited lang sa laman ng PayMaya mo.

• It’s also better to use PayMaya for transactions na monthly ang payment (Spotify, Netflix, etc) easier to cancel.

• Use your CC to earn points. Pwede ka mag travel for free just using your points. Pwede kasi convert to PAL mabuhay miles or cebupac getgo.

• use the cc for promos like free starbucks, free pizza, free movie tickets, vouchers, etc.

• if purchasing high ticket items, go for installment with 0 interest.

• enroll your utilities (Meralco, telco, water,etc) para hindi mo na Iniisip Yung mga due dates.

• always ask for annual fees to be waived.

• enroll your cc to get SMS every time you use it. Para kung may iba man gumamit, ma notify ka agad. It will send the transaction details.

• using cc, it’s easy to track your expenses dahil Andun sa statement of account.”

-Alma Rivera

To add, Debit cards are not generally accepted abroad regardless kung maraming laman ung account mo. Kahit may Mastercard/Visa na tatak ung debit card, there will be swipers na hindi sya accepted. FYI lang.”

-Ricky Tiu

If you want to learn more about stock trading join our Facebook Group called Trader’s Lounge

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There are available weekly lessons inside. We created different trading strategies like MAMA which made a lot of traders profitable. Other trading strategies include FISHBALL, PAPA, CALMA and more. We want to offer OFW’s, Employees and all Filipino people a chance to learn without paying a cent. 

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2 Comments

  • Angela Cerrada

    CC is good but collecting it is not. One lesson learned is pag ang daming mong CC, marami ka ding babayaran na annual fees which ranges from 1,500 – 5,000 depende sa klase ng card. I suggest that apply only for a card na very in-demand (ex. BDO, BPI, CITI, METRO) because these cards have more affiliated stores that offers promos and benefits exclusive only for them. 1-2 cards is enough to avoid being tempted to shop and more managable pa.

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