What is Difference Between Credit Card and Debit Card: The way we bank and pay bills has been drastically changed in past few years. These days we have many other options with the help of which we can make money transactions. But before the introduction of credit cards and debit cards we all had to carry the paper cash with us. We do carry paper cash with us today as well but we use our credit card and debit card wherever and whenever possible.
What is Difference Between Credit Card and Debit Card?
But the question here is What is Difference Between Credit Card and Debit Card? well, I will explain to you what is different between these two cards and also some of the important things which are important to know about them.
What is a Debit Card?
Now let’s start with this article and read what actually a debit card is. When we open a bank account any of the banks that are operating in India or in any other part of the world. (if you are resident of other countries) The most basic thing we get from the bank is a debit card.
Basically, a debit card is a plastic card with a magnetic strip on it which contains details about your bank account. You can use your debit card to withdraw money from your bank account.
You can also use your debit card to make payments at POS Swipe machines and online if you make a purchase online.
But wait did you notice what I mentioned above?
I am talking about “money from your bank account” I have mentioned this because you can use your debit card only when you have money or balance in your bank account.
Whenever you use your debit card to make payments or withdraw money, the first thing happens is the system checks if you have balance in your bank account.
If you have balance in your bank account then the transaction takes place.
And the same amount of money is debited from your bank account. But yes, sometimes you may come across some service taxes applied on the transaction.
Service taxes depends on the type of transaction you are making and the bank in which you hold your bank account.
What is Debit?
You just read the upper part of this article and you came across this word ‘debit’. But what is debit? I would like to share this thing with you before we proceed to further part and read What is Difference Between Credit Card and Debit Card.
When you use banking services of your bank like using internet banking to make payments online or anything like that. The money is debited from your bank account.
And when deposit money or receive money to your bank account then a credit transaction will take place.
These are the two kinds of transactions which take place in bank accounts.
So we can say that debit is a transaction in which the money is deducted from your bank account balance.
What is a Credit Card?
Now let us check out what is a credit card is?
Even credit card looks the same as the debit card, even this card is issued by the banks. But you will not receive this card when you open your account by default.
If you need to have a credit card then you have to apply for a credit card.
But there is a difference between credit card and debit card.
And that is when you use your credit card to make the payment then the transaction takes place even when you don’t have money in your bank account.
But how? who pays the money on your behalf?
This maybe the question in your mind currently. Because I have mentioned that the transaction takes place successfully even if you don’t have money in your account.
The bank or a banking institution which has issued you the credit card will make the payment to the merchant from whom you buy products and services.
You will get the bill at a fixed time cycle from the bank which has issued the credit card to you. You will have to pay the money back
In fact, the bank which has issued you the card will apply some interest on the money they have paid for you.
But why interest is applied when you use credit cards?
It is quite obvious that your interest is applied to you if you use the credit card.
When a bank or any financial institute issues you a credit card they are doing business.
And this is how credit card business works, they will lend you the money and later they will ask you to pay the money bank with some amount of interest.
Is it safe to use a debit card and credit card?
The answer is Yes, using debit cards and credit cards are safe because your cards are secured with PIN Number.
In most of the cases, they are secured with 4 digits code which is called as PIN Number. You can’t use your debit card or credit card until you know your PIN Number.
Some of the credit cards and debit cards have two steps authentication. When you enter your card detail you have to enter your PIN number.
And after that, you have to enter the One-time password which you received on your registered mobile number.
Until you enter your PIN Number and OTP you can’t use your card to make the payment.
But do keep in mind while withdrawing money from your bank account using a debit card you will not get any OTP.
To withdraw money from the bank account using a debit card you have to visit any of the ATM centers and dip in your debit card.
After that enter your 4 digit PIN Number and amount that you want to withdraw from your bank account.
You will get the money in cash but you will not receive any OTP from the bank. But you will get an SMS notification from the bank telling you that you have used your debit card.
Your credit cards and debit cards are safe until you don’t disclose your PIN and other details to anyone.
If your data gets compromised then you will have to contact the bank which issued the card for you immediately and block your card.
Let’s Wrap Up The Things Now.
This table will make you understand the difference between credit card and debit card.
|Credit Card.||Debit Card.|
|You have to apply for credit card separately.||You will get the debit card by default when you open your bank account.|
|You can use a credit card even if you don’t balance in your bank account.||You can’t use your debit card without bank account balance.|
|Interest plus service tax will be applied to your transactions.||No interest will be applied to your transactions.|
|Good credit score is required to get a credit card.||No credit score is required.|
|You will get a bill based on fixed time cycle from the issuer.||No bill will be sent to you.|
So these are the 5 Difference Between Credit Card and Debit Card. I hope you liked this article of mine, do share your opinion about this article by commenting below.
I would love to hear from you. And if you have any other differences between these two cards with you then comment them below.
I will add them to the article and make it more valuable.