Credit with debit or credit card: how to choose?
When looking for credit with a credit card or credit card, you must be particularly vigilant about credit. Indeed, credits linked to a payment card are almost systematically revolving credit solutions. These can be very expensive when used improperly. We will see how to choose the right payment and credit card.
Credit with card: what credit?
When taking a credit with a credit card, there are generally three offers offered:
- Store credit with debit card or credit card
- Credit from specialized organizations (Zaloan, Viloan revolving credit, etc.) with payment card or credit
- Bank credit with debit or credit card
It seems important to distinguish between a payment card and a credit card, especially since European regulations do not seem to be entirely aligned with French regulations on the subject. To simplify the explanations to follow, we propose the following approach:
- Credit card: card used to activate the use of a credit
- Payment card: card that does not activate the use of a credit
For our article, we will only talk about credit card since we are going to study credit with credit card and therefore credit card.
Credit from banks and specialized organizations
When you are looking for credit with a credit card, it is natural that you turn either to your bank or to an organization like Bankate or Viloan. The main point to see in mind is that the credit card will be linked to revolving credit. However, this small revolving credit can be very expensive. Its revisable APR rate can indeed increase up to 20%, which is close to the maximum authorized by the rate of wear. So that this type of credit does not cost too much, you must:
- Find the cheapest revisable APR rate possible
- Find fast repayment speeds (which generate less agios)
- Find the best promotions
- Prepay as soon as possible
This type of loan is preferred for a small loan of an amount generally lower than the 4000 USD credit. For larger amounts, you have to turn to amortizable loans which are generally much cheaper. It is also according to this distribution that our credit comparator works.
Revolving credit with card
This credit card credit is a real opportunity for banks and lending organizations. The more credit is used, the more lenders will earn interest. Conventionally, a revolving credit online or within a bank is used through transfers between the loan and the customer’s bank account. These transfers are made punctually for a difficult end of the month or a small project, this is also why this type of loan is often called cash credit.
By connecting credit with a credit card to make daily payments or cash withdrawals, credit agencies and banks make it much easier to use this type of loan. To limit the risks of overusing the credit on your credit card, the Lagarde Law has come to require that credit linked to a card can only be activated after the client’s consent to each use.
In other words, the use of revolving credit by a credit card must be cash by default. The use of credit with a credit card can be done either by choosing credit payment on the store’s payment terminal or by post-purchase arbitration generally offered either by sms or by connecting to the website of the bank or credit organization.
Without these arbitrations, payments must be by default in cash and therefore taken directly from his bank account. We must therefore be vigilant because if the available account is not sufficient, we can quickly find ourselves overdrawn… Which is a shame because the equivalent use of revolving credit is often cheaper than the use of a bank overdraft.
Which credit card?
When you take a credit with a credit card, the card offer is not that important. Indeed, there is generally the choice between a conventional bank card and a high-end bank card. There is generally no choice between Mastercard or Visa, each bank or organization having its preferred partner.
Credit with store card
The other major category of credit with a credit card is store credit. It is also through them that the credit card was really born. Indeed, for years the banks did not offer many credit cards in the sense attached to a credit. Store payment cards tied to store credit have long held the sector.
For a very long time, these cards were what we call private cards. In other words, cards that could only be used in the brand in which the credit was taken out. One of the first was the Kangaroo card for La Redoute, then the 4-star card for the 3 Swiss etc…
Since then, the market has changed. Credit with credit card can no longer be offered by default, the offers have been transformed and we now find store cards that are usable everywhere like lately the Fnac card which has become a Mastercard. It is naturally in cash by default, the revolving Fnac credit can be used when necessary for all its purchases and not only those made at Fnac. The loyalty program has been expanded.