Credit Card vs Debit Card: Nowadays plastic cards have become an essential part of our life on an everyday basis. In general, there are two main types of cards that are used all around the world. Whether you are shopping at the mall or at an online store, you can make the payment through plastic cards such as credit or debit cards. Credit Card and Debit Card comes with different limits as well as specifications and can be used in many different situations.
Even though people use these two cards on daily basis but they rarely know the difference between the two. Today, in this post, we are going to discuss the difference between a Credit Card and a Debit Card along with their types, benefits, and much more. So, to get the information in detail, read the following content till the end.
What is Credit Card?
A credit card is a very convenient plastic card that is issued by a bank or any financial organization. It helps its users to borrow money from that credit card issuer up to a certain limit. The money borrowed by the credit card users needs to be returned to the issuer with a fixed interest along with terms and conditions on it. Also, credit cards are available with 50 days of interest-free, thus, the amount needed to be paid before this timeline or due date. The users also get a facility to buy now or to pay later and it comes with monthly limits. The limits of credit cards are based on the type of cards the user is using and the relationship between the user and the bank is another factor.
Credit Card Types
There are mainly six types of credit cards and these are as follows:
- Standard Cards: Have no annual fee and can extend the credit line when the balance of the user is transferred and purchased.
- Premium Cards: Offers special services like event access, airport lounge, and so on. This credit card has a very high annual fee.
- Reward Cards: Offers several rewards like cash backs, travel points, and more.
- Balance Transfer Cards: Offers balance transfer from one to another credit card at a low-interest rate or low fee.
- Secured Cards: These are highly secured credit cards than others and are paid to the issuer as collateral.
- Charge Cards: Offers credit with no limit, however, the balance borrowed needed to be paid every month to the issuer.
What is Debit Card?
A debit card is the most common payment card used all around the world and it has been issued by the bank. The debit card is connected to the bank account of the user. So, when the user uses a debit card for any payment, the money gets automatically deducted from the bank account of that user.
This card doesn’t have any limit as it depends on the balance available in your account. However, Bank does consider a purchase limit on the debit card on a daily basis. In addition to that, debit card users don’t have to pay any interest as they are using their own money saved in their bank accounts. Meanwhile, you also don’t have to pay any annual fee, however, the bank charges a little maintenance amount.
What are the types of Debit Cards?
There are mainly six types of debit cards and those are given below:
- Visa Debit Cards
- Master Card Debit Cards
- Visa Electron Debit Card
- Maestro Debit Card
- Contactless Debit Card
- Rupay Debit Cards
Credit Card vs Debit Card: Difference Between a Credit Card and a Debit Card
Credit Card vs Debit Card: By looking at both the cards, these two looks almost the same and so is their convenience. These have a 16-digit number, an expiry date, and a magnetic strip on them, and can be used for online or offline shopping. The similarities between these two cards are quite the same and therefore, it is hard to differentiate between a Credit Card and a Debit Card. However, a credit card lets you borrow money from the card issuer/ organization up to a certain limit. On the other side, a debit card will let you use the money that is available in your bank account which is connected with your card. Below here, we are providing you detailed differentiation between a Credit Card and a Debit Card:
- A credit card allows its users to borrow money from the issuer of the card, while in a Debit card your money is directly deducted from the bank account linked with the card.
- A Credit line is extended to the user by the issuer of the card, while a debit card uses the bank account of users as a source of money.
- The card issuer pays for the purchases made by the users through a credit card, while on a debit card, the owner of the card pays for the purchases through their bank account.
- In credit cards, complete statements or bills are going to be provided at the end of each month. On the other hand, there is no bill or history statement released on debit cards.
- There are multiple high charges on credit cards, while debit card has low charges.
- When it comes to interest, a debit card doesn’t charge any. On the other side, credit card users have to pay interest if they fail to pay borrowed money before the due date.
- Credit card users get several rewards as well as cash-back offers. Meanwhile, in debit cards, minimum rewards are offered to their users.
- Now coming to their security, credit cards are more secure than debit cards. So, you need to handle your debit card securely and should not share its password anywhere.
Final Words
Overall, both Credit Card and Debit Card are convenient, flexible, easy to use, and comes with their individual benefits. A credit card offers warranty and purchases protection and it is also fraud protected. It builds the credit history and offers several rewards. On the other hand, a debit card is inexpensive to use as no interest is charged. It can be used at ATM without any fee and it doesn’t build a credit history as well. The best part about a debit card is that the approval is very easy.