- Credit vs. debit cards: which is suitable for you?
- Borrowing or Instant Payment? Comparing Credit and Debit Card Structures
- Differences in debit dates and management points: credit card vs. debit card
- Difference in difficulty of acquisition: debit card as an alternative when credit cards are difficult to obtain
- Selecting a card for API integration: for smooth integration with accounting software such as freee
Credit vs. debit cards: which is suitable for you?
Credit and debit cards are both convenient tools for payment, but they work very differently.
| Credit Card | Debit Card | |
| Characteristic of funds | borrow | Instant debit from your bank account |
| Process | Requires Examination | Tied to a bank account |
With a credit card, the credit card company temporarily advances the money, and the user pays it back later. Debit cards debit the cash immediately from the bank account upon purchase. For business owners, the choice between the two depends on how they manage their money and their credit situation.
Borrowing or Instant Payment? Comparing Credit and Debit Card Structures
Credit cards are equivalent to “borrowing.” Although the amount advanced by the credit card company must be repaid at a fixed time, such as the following month, the advantage is that the funds remain in hand during the repayment period, allowing for flexible cash flow management. On the other hand, interest and fees may be charged, and delaying payment creates risk.
Debit cards are instant payments. They can be used as long as there is a balance in the bank account, but the payment cannot be made if the balance is insufficient. This simplifies the management of funds and is attractive to sole proprietors who want to control their expenses.
Credit cards must be approved for issuance before they can be borrowed. On the other hand, debit cards are usually tied to a bank account and can be authorized immediately.
Differences in debit dates and management points: credit card vs. debit card
Credit card debit dates are usually set for the month following the month of use. This grace period allows for cash management and planned payments, but also carries the risk of interest charges if forgotten.
Sole proprietors have the advantage of being able to wait for the payment of funds.
With debit cards, withdrawals are immediate. Since the amount is deducted from your account the moment you make a purchase, spending management is simplified, and budgeting in advance is easier.
Have you ever waited for your credit card to be debited? For sole proprietors, it is advantageous to have the funds deducted immediately so that they can be connected to bookkeeping immediately.
Difference in difficulty of acquisition: debit card as an alternative when credit cards are difficult to obtain
As we told you, obtaining a credit card requires a credit check and proof of income.
And in some cases, it is difficult for sole proprietors to be screened. On the other hand, debit cards can be obtained immediately in most cases as long as you have a bank account and do not require any particular screening.
Therefore, even if you are unable to obtain a credit card, a debit card can be an efficient way to pay for your business and keep records in the bank.
Selecting a card for API integration: for smooth integration with accounting software such as freee
Many cloud accounting software can be linked to bank accounts.
If you do not have a credit card, you can use a debit card since a record of debit card usage can be recorded as account activity.
The freee introduced by our firm supports API integration with bank accounts and credit and debit cards. If you make a purchase using your card, the transaction data will be automatically reflected in your ledger.
Debit cards simplify cash flow management because expenditures are reflected immediately, making monitoring the financial situation in real time easier.
Freee may seem convenient, but the number of cards that can be linked to it may be limited. Use your debit card to smoothly link with freee. This can reduce manual input work and improve the efficiency of your business.
Keyword
Self-employed Debit Card
