Bank Guarantees, Debit vs Credit Cards and Financial Costs

Financial Discount and Clearing Account Credit

Financial discount (clearing account credit) often involves considerable cost increases if the beneficiary does not use the funds in their entirety immediately and for the full term during which they take effect, because accrued interest applies to the whole credit.

Bank Guarantees and Deposits

Bank guarantees are guarantee contracts under which the credit institution assumes responsibility for compliance with the customer's obligation when the customer is the principal debtor. They involve the commitment of funds to pay a debt if the principal debtor does not pay.

The bank will charge the appropriate commission agreed on the amount of the guarantee and interest. In case of default by the guaranteed party, the guarantee will be executed. POLICY NUMBER

Debit Cards

Debit Cards (4B, VISA, Maestro, ...) can be used to make purchases in shops and to withdraw cash from ATMs. They are associated with a checking or savings account, and transactions generate a direct debit from the account in the amount of the transaction. Operations are authorized taking into account the availability of the balance associated with the card. A debit card is a tool to buy and pay now.

Benefits of Debit Cards

• Reduces risk by not having to carry cash.
• Greater control of costs.
• Helps reduce personal debt.
• It is a practical system to pay for purchases.

Credit Cards — Advantages

Credit cards give the chance to buy needed items at any time and are accepted by many shops worldwide. You do not have to carry cash. Banks often send a monthly statement summarizing operations. Credit cards are more convenient than writing checks: they combine all operations into a single payment with a fixed due date.

Disadvantages of Credit Cards

• Items may cost more because you have to pay interest and fees.
• You may encounter financial problems when you lose track of what has been spent.
• They provide the opportunity to make compulsive purchases.

It should be borne in mind that a credit card is a tool to buy now and pay later, since it is an unsecured loan that provides a financial benefit/payment for purchases.

Card Differences

The credit card is a means of financing: purchases or cash advances are not charged to the account until the following month. Debit card charges are immediate. With a credit card you have access to a credit limit that can be drawn regardless of the bank account balance, while debit cards rely on the available account balance.

Note: All of the above describes typical features; fees, commissions, interest rates, and specific product names vary by bank and jurisdiction.