Difference between credit card and debit card

On a daily basis, there are various transactions for purchases made by us. Usually, we use cash as a medium of exchange, but nowadays plastic cards are also very useful as a medium of exchange.

Today we can purchase anything by using a plastic card like credit card and debit card and for cash withdrawal at the ATMs.

So you should know what a debit and credit card? And what are their benefits, limitations and difference between credit card and debit card?

I am writing important points which you should definitely learn, in the following paragraphs I am explaining you:

    What is a debit card?

    • It is a plastic card issued by a bank.
    • Debit cards are linked to your saving bank account, usually Banks issue debit card at the time of opening the saving bank account.
    • Debit cards allow you to purchase things by using a debit card even if you do not have cash in your hand and there should be balance in your bank account.
    • Every time you make a purchase the amount is automatically deducted from your savings bank account.
    • No interest is charged by the bank on purchase by using a debit card in the market.

    There are two types of debit cards:

    Bank Debit Card

    It is issued by the bank and whenever you purchase through a debit card it automatically deducts the amount from your bank account. You can withdraw cash at ATMs by using a bank debit card.

    Prepaid Card

    This card or not linked with a bank account, these are available in stores and online for purchase of their outlets for online web stores.

    If you have balance in prepaid cards you can use it for purchase of products. If your balance in this card gets low, then you can increase the limit by putting more balance in a prepaid card account.

    The maximum limit of debit cards spending is set up by the individual banks or Credit Union that issue the debit card.


    What is a credit card?

    • It is a plastic card issue by a bank.
    • It seems to be like a debit card but it's not the same because for using a credit card you need not have a balance in your bank account.
    • It provides you with a credit facility.
    • When you purchase through a credit card during shopping, the amount gets accumulated and at the end of the billing cycle which may be one month, you have to pay the whole amount on the due date. If you pay after the due date, banks can charge interest as well as late payment charges.
    • Credit card can be used in an emergency, when you have no money in cash-in-hand and there is no balance in your account.
    • While using this card, you agree to repay the credit card company the amount you borrow (in the form of credit allowed for purchase) plus Interest charges.

    Now the question arises, which debit credit card is to be used, so to conclude this you need to refer the various pros and cons of debit and credit card to find the difference between credit card and debit card?


    Pros and Cons of Debit Card

    Pros of Debit Card

    • If you use a debit card you can keep it checked on your spending.
    • There are no interest charges on your purchase.
    • You can use a debit card to withdraw cash from ATMs.
    • You can set an alert to your debit card. 

    Cons of Debit Card

    • In case of emergency situations, you can use a debit card only if there is balance in your bank account.
    • Credit score is not counted on debit card transactions.
    • There are certain charges which are deducted in the form of ATM Charges and overdraft charges.


    Pros and Cons of Credit Card

    Pros of Credit Card

    • Credit cards help to build your credit score.
    • In case of emergency, if you have no balance in your savings account, you can immediately use a credit card. 
    • No need to pay the amount you use at the time of purchase, you can repay it at later date. 

    Cons of Credit Card

    • The main cons of credit cards are interest; if you are not able to make the full payment on the due date then you have to pay interest for late payment, even Banks charge interest from the date of purchase to date of deposit. Interest free periods are not allowed on default payment.
    • There are certain charges you have to pay like late fees, charges for cash withdrawal by using a credit card.
    • It built bad habits of spending more than you earn, if you do not use it carefully, it puts you in the burden of credit card debt.



    So, which card is best depends upon different situations; it depends upon your income and your expenses. Now you have completely knows the difference between credit card and debit card.

    We advise you not to use the credit card unless you are capable of paying the credit card bill every month. Instead you should focus on increasing your income by finding other sources of Income.

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