I’m not sure if that’s accurate because most of what I know about it comes from the Internet and television shows, but why do people always use credit cards to make purchases? Although I’m not very interested in finance, I think that most people in Germany have “EC” (Electronic Cash) cards, which allow you to pay for purchases without having to wait for money to be taken out of your bank account. Your paycheck is also automatically deducted from this card, a credit card functions similarly to a debit card in that you must pay for it before you can use it, or you can load it with as much money as you like but still have to pay it back with more funds. Why not simply purchase one and make your payment using funds from your bank account? Or am I just misinterpreting what a credit card is?
Hey @Anne…Credit and debit cards both let you make purchases, but they function differently. Here’s a simple breakdown:
Debit Cards: These are directly connected to your bank account. When you buy something, the money is taken out of your account right away.
Credit Cards: These give you a line of credit to borrow from. You use the card to make purchases and then pay back the borrowed money later. If you don’t pay the full amount each month, you’ll have to pay interest.
People use credit cards for several reasons:
- Building Credit: Using a credit card responsibly can help improve your credit history.
- Rewards: Many credit cards offer perks like cashback, points, or travel miles.
- Protection: Credit cards often provide better protection against fraud compared to debit cards.
- Emergency Funds: They can be handy for unexpected expenses when you need extra funds.
In Germany, the “EC” card works like a debit card. It’s linked to your bank account, so transactions are immediate. Despite having money in the bank, people might still use credit cards for the added benefits and flexibility they provide. It’s not just about needing extra money; it’s also about the advantages that come with credit cards.
In simple terms, most people prefer credit cards over debit cards because the credit card offers you more security as it increases your purchasing power
An Australian was concerned that we were using too much cash as the day began.
A German says, “We use too many credit cards,” as the day comes to an end.
Hello, Ann! You do not need to wait until the due date to pay your debts! Avoid the cursed compounding interest on your credit card balance. When I use credit cards during lunch, I pay them off at night by transferring money from my savings account via mobile banking. Thank you, technology.