Credit Cards and debit cards often look similar to one another in appearance. They both have 16-digit card numbers, expiration dates, magnetic stripes, and EMV chips, and they can both make transactions offline or online simple and convenient. Debit cards allow you to make transactions with money from your bank account. Credit cards allow you to request money from the card provider up to a specific limit.
But have you studied the difference between credit cards and debit cards? Why is it necessary to carry a debit and a credit card, and which card offers the most benefits? To learn more, read the article.
You will have a long repayment time if you use a credit card to make a transaction. To use a debit card, you must have funds in your account. Using a credit card gives you the opportunity to gain rewards and discounts. These benefits may not be available with debit cards.
You may simply obtain the EMI facility by using a credit card. However, debit cards do not provide you with this choice. Credit cards allow you to pay an amount in EMI installments. However, it is critical to note that the installment must be paid on time in order to protect your credit score.
If your debit card is lost or stolen, you could experience a significant financial loss since your hard-earned money in the bank is in danger. If, on the other hand, someone illegally uses your credit card, you can immediately notify your credit card issuer, who can assist you and pay you for fraudulent purchases. Some corporations, such as Visa and Mastercard, have no liability coverage for these scenarios.
Debit cards do not have yearly fees, although many credit cards do. Using your debit card to make a cash withdrawal is likewise free of charge. Credit cards, on the other hand, can charge a heavy interest rate on large transactions.
difference between a debit card and a credit card
Debit cards and credit cards are both payment cards that allow you to make transactions, but they function differently and have unique features. Here are the key differences between debit and credit cards:
Source of Funds:
Debit Card: A debit card is directly associated with your bank account. When you use a debit card to make a transaction, the money is debited from your account immediately.
Credit Card: A credit card enables you to take out money from the card issuer up to a certain credit limit. The credit card company pays for your purchases, and you settle the balance later, either in whole or in monthly installments.
Debit Card: When you use a debit card, the payment is processed in real time by consuming funds from your bank account. For you to complete the transaction, you must have enough money in your account.
Credit Card: The payment is not taken instantly when using a credit card. The card company pays for the purchase, and you receive a monthly statement detailing all of your transactions. You have the option of paying the whole sum or making a minimum payment, with interest costs added to the remaining balance.
Interest and Fees:
Debit Card: Because a debit card is used with your own money, no interest is charged on transactions. However, some banks may charge fees for specific types of debit card usage or account upkeep.
Credit Card: If you keep a balance on your credit card (do not pay the entire bill), interest is charged on the unpaid amount. Depending on the terms and situations, credit cards may also include yearly fees, late payment fees, and other costs.
It’s essential to note that these differences may change based on the terms and conditions of your debit or credit card, as well as the regulations of the issuing bank or financial institution.