Bank Transfer Versus Credit Card

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Nowadays payments for various purchases can be made through various mechanisms. Most of the online transactions can be performed through a credit card or a debit card or through online bank transfer (also known as internet banking in many countries). Whatever be the medium of payment, ultimately cash has to be released by the buyer.

Let Us Discuss Important Differences Between A Bank Transfer and a Credit Card.

a) Release of Cash:

Though in both the cases payment has to be made by the buyer, there is a difference in duration within which actual cash flow takes place. In case of a bank transfer, cash is released immediately in favor of the supplier while in case of a credit card; cash flow takes place after a certain period of time. This period can be called as credit period.

b) Interest Charges/Penalties:

In case of a bank transfer, payer is aware on the balance in his/her bank account. So at the time of making the payment, he/she has to ensure that minimum balance required for maintaining the account will be available in the account after releasing the payment. Though some banks may offer a limited overdraft facility, there is a possibility that they may charge certain interest or penalty for providing this facility.

In case of a credit card, the holder can use to make purchases up to the credit limit provided by the bank/financial institution. Interest/Penalties are levied only when payment is not made within the period specified in the credit card statement. Such charges can be substantial and credit card holder should make every possible effort to release the payment within the credit period. Todos los regalos y muestras gratis, promociones, productos gratis, cupones descuento, sorteos, concursos, ofertas España del 2022 Muestras gratis y regalos

c) Limit on Amount:

In case of a bank transfer, there is no limit on the amount which can be used for making payments (provided sufficient balance is available in the account). However, in case of a credit card, a predefined limit is set for every card holder. This limit is decided on the basis of credit worthiness of the customer.

Here, the holder can use the credit card to make payments only to the extent of approved credit limit. For Instance, an individual holds $ 25,000 in a bank account. He has a credit card with a limit of $ 15,000.

This individual can use his bank account balance to the extent of $ 25,000 (subject to maintenance of minimum balance).However, if he decides to make payment through his credit card, he will not be able to make a payment that is in excess of the approved limit of $ 15,000.

d) Easy To Use:

Bank transfers are generally made with the use of internet. Hence, it becomes impossible to use this facility for shopping at a store or at a mall. Credit card, on the other hand, can be easily carried in a wallet and can be used for making purchases at a store or at a mall.

Hence, when compared to a bank transfer, credit card offers more flexibility to the customer. This is one of the reasons why credit card is used more frequently in comparison to a bank transfer.

Photo Credit: newprepaidmastercard.com

Bank Transfer Versus Credit Card

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