The difference between debit card and credit card is same as debit differs from credit. Debit means ‘deduct’ and so when an individual makes use of debit card, he is deducting money from the bank account linked to the card. The individual is able to spend that much amount of money, which is present in his bank account and not more than that. A debit card is like a cheque, from which money is subtracted from his/her personal savings/current account.
Conversely, credit refers to money received as a loan by the bank to the customer, which should be repaid, with interest on a later date. Credit history, paying capacity, income and debts are the parameters which determine the amount of credit. When one makes use of a credit card, he is actually taking a loan from the issuing bank, which requires repayment along with interest.
|Basis for comparison||Credit Card||Debit Card|
|Meaning||Credit card is issued by a bank or any financial institution to allow the holder of the card to purchase goods and services on credit. The payment is made by the bank on the customer’s behalf.||Debit card is issued by a bank to allow its customers to purchase goods and services, whose payment is made directly through the customer’s account linked to the card.|
|Implies||Pay later||Pay now|
|Bank Account||The bank account is not prerequisite for issuing a credit card.||The bank account is a must for issuing a debit card.|
|Limit||The maximum limit of withdrawing money is determined according to the credit rating of the holder.||The maximum limit of withdrawing money will be less than the money lying in the saving bank account.|
|Bill||The holder of the card has to pay the credit card bill within 30 days of every month.||There is no such bill, the amount is directly deducted from the customer’s account.|
|Interest||Interest is charged when payment is not made to the bank within a specified time period.||No interest is charged.|
A credit card is a type of facility which allows its customers to purchase goods and services on credit, and the payment is made by a third party (financial institution) on his behalf immediately. The customer has to pay the credit amount to the third party at a later date. In this regard, every month, the financial institution sends a bill to the card user for the amount paid on his behalf. Usually the user is allowed a credit period of 30 days within which he can pay the amount, afterwards, interest is charged at a prescribed rate.
A debit card is a type of facility provided by the banks to its customers to purchase goods and services against his own saving bank account. So, whenever the transaction takes place, the amount is deducted from the customer’s account. Here, the bank charges a nominal amount every month for the use of the card. It can be used for purchasing goods, transfer of funds, internet banking services, deposits, etc. Nowadays, ATM cum debit card is also available in the market which allows you to avail all the facilities of the ATM card.
Similarly like a credit card, it is also made up of plastic with a magnetic strip which contains all the basic account details of the customer.
It is not easy for us to carry a huge amount of cash or a chequebook every time with us, so credit card and debit card are good facilities that helps to overcome such a problem. If you have enough cash balance in your bank account, then you can choose the debit card, but if you don’t have a bank account and your credit ratings are quite good, then you can choose the credit card. It’s up to you, decide yourself? Which card suits you more, according to your requirements.