Tutoring students about the importance of saving and budgeting should be a significant part of their learning process. To help students understand the concept of financial management from early on, educators need to build a strong foundation on how to handle money. Oftentimes, even adults struggle to prioritize between ‘wants’ and ‘needs’, spending their savings on unnecessary purchases while neglecting the basic necessities.

Trying to decide upon a payment method can be a daunting task. With options of Credit and Debit cards that can be used to make payments in a lot of places, This blog post will try to clear out the confusions you might have between credit and debit cards. Make sure you read this post in its entirety so you may emerge having a better understanding of debit and credit cards, and what works best for you. 

Primary Difference between Credit and Debit

• Debit: When you choose to make payment from a debit card,  the amount is drawn from your bank account in real-time. 
• Credit: When you use a credit card, the fund is borrowed from your card issuer (bank or financial institution) and you will have to pay the amount back with interest later as per the card issuer terms. 

Types of Debit Cards:

• Standard debit cards draw money from your bank account
• Prepaid debit cards have a preloaded amount in the card which allows people to make electronic transactions for people who do not have access to bank accounts.

Benefits of using Debit Cards:

Easy access to your money

A debit card gives easy access to your money that you have already deposited in the bank. Debit cards are convenient to load funds to different digital wallets like Khalti for free. You can use the card to draw money from ATM machines or can use it in stores that provide card swipe machines.

Avoid being in debt

Debit cards will only use the money you have in your bank account which will help you to be on a budget. When the amount in your account runs out, you will not be able to use your card. 

No annual fee

Debit cards do not charge you an annual fee, nor do they charge you for withdrawing cash from ATM machines. 

Types of Credit Cards

Credit cards are issued as per the income of an individual, however, they have high-interest rates. 

• Standard credit cards extend a line of credit for the uses for making purchases and cash advances
• Secure credit cards require the user to deposit cash which the bank will use as collateral  

Benefits  of using Credit Cards

Convenient for emergencies

If there is an emergency and you suddenly have to pay for a house repair or if there’s an unexpected trip to the hospital, you can easily pay with your credit cards. In such instances, when you haven’t planned a budget for emergencies, you can use a credit card to pay for these.

Make payment from Khalti app

Whenever you purchase anything from Khalti, you can easily load money from an SCT/VISA card and make direct payments via Khalti. Likewise, it is also possible to make credit card payments online using Khalti.

Build your credit history

Although, it’s not that much applicable in the case of Nepal, building a credit score can be useful in foreign countries to approve loans from the bank in the future. Paying off your credit bills each month shows that you are capable of paying debts.

Universal Acceptance

A debit card is not usable, especially while visiting foreign countries. In such cases, a credit card can be helpful as some of them are globally accepted. The use of credit cards makes it easier to rent a vehicle or stay in a hotel room anywhere in the world. Even merchants and car companies want you to pay with credit cards. 

Providing financial literacy to students can help them manage their finances effectively and stay out of debt. Wrong use of these options (Debit/Credit) can lead them to additional problems. Therefore, it is essential to teach students to make safe use of cards. 

We are providing education about digital literacy through different campaigns like SMART CHHORI. Khalti Digital wallet has also been collaborating with UNCDF, to digitize and empower women-led businesses, make women financially independent, provide free Khalti QR and free SMS to promote women’s business.