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When applying for a credit card, banks often offer cash cards as alternatives. Although they are similar in appearance and are short-term loans from financial institutions, these two cards have different characteristics and advantages. How are they different? Let’s find out with ACU PAY
The credit cardholders are free to spend without cash, or pre-pay for goods and services to cardholders, even if they do not have cash. However, it is necessary to pay this expense in advance for the period specified by financial institutions, otherwise additional interest will be charged on lending in advance.
Another service provided by financial institutions is a ready-to-use personal loan that focuses more on cash advance payments. Cash cards are suitable for people who need cash urgently or cannot use credit cards to pay for goods.
The advantages of both credit cards and cash cards are that there is no need for collateral or guarantors, easy to approve in a short period compared to other types of loans.
Credit cards are suitable for those who want to spend for their goods instead of cash by Advance payment or long-term installments while cash cards are suitable for people who want to have financial liquidity or need immediate cash to pay for emergency expenses such as medical care and car repair.
Credit card applications require a minimum salary of 15,000 baht per month, a lot of procedures, and are more difficult to approve than cash cards. On the other hand, Cash card applications can be made with a starting salary of less than 15,000 baht per month and no salary slip. This is more suitable for freelancers, self-employed or low-income people, and also faster in terms of approval than credit cards.
Credit cards have the highest interest rate of around 28%. The advantage is the interest-free period. If you pay within that time, you will not lose interest but start charging when you pay a day later than the due date or pay at a minimum. The card will charge interest as soon as it starts to be paid, but there are advantages that interest is a reduction in the principal. The sooner you find the money to repay, the lower the interest rate. The maximum interest rate is about 18%.
Credit cards are suitable for installments because they do not have to pay a large sum at once and increase freedom of use. Usually, credit cards offer 0% installment promotions for up to 3-10 months, which cover many stores, and cardholders can collect points or get a refund. The cash card, in terms of goods installment, even though some cash cards offer 0% installment for up to 48 months, there are fewer shops that support cash cards rather than credit cards and only offer certain products without points or discounts.
For cash withdrawals, credit cards are not very popular because they charge interest as soon as they are pressed and have a high fee of around 3%. On the other hand, cash cards can withdraw cash without any fee.
Credit cards are more suitable for those who prefer a good installment to use cash, have an interest-free period of 0% interest for several months, and earn points for rewards or refunds. It is difficult to apply depending on each financial institution and takes quite a long time to get approved.
Cash cards are suitable for those who want to use cash in an emergency payment, there is no interest-free period, and the interest rate is more expensive than some credit cards. Some cards can offer installments but do not cover promotions and products, are easy to apply and do not take a long time for approval. Suitable for people with low income or freelancers.
The best way to use credit cards and cash cards is to understand the terms, interest, and fees. Most importantly, we have to plan for debt repayment on time so that we can use both types of cards as much as possible.
