Business

Difference between debit card and credit card

Main Difference

The current decade brings with it many innovations. Similarly, other fields, the banking sector also brings wonderful changes in the economy. Nowadays, in the fast-paced age of banking, it is very difficult to carry cash with you all the time. Now your cash is replaced on a small card that looks like a business card. Paper money has been exchanged for plastic money. Today, the two fundamental innovations in the banking sector are the credit card and the debit card. They are like an electronic card by which you can access your money. All you need is to visit your nearest ATM (ATM), insert the card and withdraw money after entering the PIN (personal identification number). You can make purchases with these. Both a debit card and a credit card offer you financial benefits. If your card has been lost, you can block it by calling your bank’s hotline and your amount will remain safe. Apparently, there seems to be no difference between them, and an ordinary person cannot easily differentiate between them. The difference between the two is the way they are used and the type of services they offer.

What is the debit card?

The debit card is one, in which you have a previous balance in your account. With a debit card, you can use your bank account from anywhere and at any time. It is a kind of ATM card. You don’t need to bother to carry out the cash all the time. Eliminate the hassles associated with writing the check and showing the ID card. You can withdraw money, limited by your savings, or you can make purchases. When you use the debit card to make purchases, this means that you allow the supplier to transfer the amount of the purchase, by swiping your finger in an electronic machine, from your bank account to your account. Therefore, you make purchases easily without the actual delivery of cash.

What is the credit card?

The credit card is a type of card that gives you the option of borrowing money for your purchases. When you use a credit card for payment, you are actually using borrowed money provided by your bank. In addition, it is your responsibility to return the money togethr with the markup to the bank according to the time and conditions established by the bank. Normally, banks issue credit cards to their permanent customers who maintain a regular account with the bank and are reliable. It has high interest rates and service charges.

Key differences

  1. The debit card allows you to make payments from your bank account and withdraw money from your account limited by your previous balance. While you are in Credit Card, or withdraw money or make payment, you actually borrow the money from the bank and become a creditor of the bank.
  2. Most issuers don’t check work history, credit, addresses, or even legal residency. The credit card brings with it many complexities such as verification, third party guarantee and deposit of some types of values.
  3. You can use the amount available in your debit card account, and sometimes you cannot use the debit card for payment purposes. While you can use the credit card as an ATM as well as a mode of payment and can perform the wide range of transactions specified by the bank
  4. With debit card, you can withdraw the amount using PIN (Personal Identification Number). You do not need to prove your identity by identification card or signature, as in the case of withdrawing cash from the bank counter. While on Credit Card, in addition to the security code, you must put your signature on the invoice to prove your identity.
  5. Normally the transactions made with Debit Card are free and there are no other charges. In case of credit card, the client is responsible for paying the borrowed amount together with the service fee or interest charges.
  6. Banks often do not provide any additional benefits to customers who have a debit card. However, to promote the culture of purchases through the credit card, the credit card holder has several reward plans available.
  7. Having a zero balance in the debit card account has no effect. However, repeatedly crossing credit card limits and missing payments on time can create a bad image and lead to a loss of trust.
  8. Using a credit card when using an ATM, to withdraw cash, is more expensive than a debit card. You have to pay an extra amount of up to 3% of the advance. The debit card is free of service charges in most cases.

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