Money and finances.Debit and Credit Cards in Canada (1 of 2)

source:www.versusbattle.com

Debit and credit cards, offer a way to access money without having to carry cash. They are accepted in most places and are a popular form of payment in Canada.

Debit cards are linked to your bank account (usually a checking account) and money is withdrawn from the account as soon as the transaction happens. You have to be sure you have sufficient funds in your account when you use direct payment.

They are usually free, and you can also withdrawn cash from the ATMs with them.

Credit cards offer a line of credit that is interest free if the monthly bill is paid on time. With most credit cards, you have to pay an annual fee, but you can collect some points/cashback when using them. 

Credit cards can be useful and convenient. In Canada, they are used to purchase almost everything, but it is easy to overspend and have to pay a very high interest rates.

There are many types of credit cards offered by financial institutions. To compare the features and the cost of them, go to: www.itpaysto know.gc,ca (financial consumer agency of Canada) and use the Credit card selector tool.

Make sure you understand all the terms and conditions: interest you must pay, how it is calculated, annual fee, minimum montly payment, how to make a complain if you have a problem with your credit card...

	Comparison
	debit card	credit card
concept	money is directly deducted from your account	You are using a line of credit
		you should pay in full unless you want to be charged with interest
monthly bill	no.	yes
asking for it	easy	depends on your credit, income…
limit	the amount you have in your account	Set by the bank. Depending your creditworthiness
interest	zero. It is your money what you are spending	If you don´t pay the full bill, you will have to pay high interest (+-19%)
credit history	It doesn´t affect. There is no credit here!	Payments can improve one´s credit rating

In next post, we will talk when debit /credit is the best option.

Take care!