The debit card and credit card differences have always confused many. As soon as you open a bank account, you get a debit card, which is indeed an easy process. However, depending on the kind of bank account you open, you will most likely need to apply for a credit card separately and wait for confirmation from the concerned financial institution to get a credit card.
Credit card or debit card
Both credit cards and debit cards look strikingly similar, but when it comes to features, they’re completely different. Knowing the debit card and credit card differences play an important role in ensuring that you get the best of them. For instance, debit cards usually don’t allow you to take loans, but you can easily get a loan with credit cards. It is advisable to check thoroughly and choose based on your needs.
What are the significant debit card and credit card differences?
When you opt for a free credit card application or debit card application, you need to consider the basics. As suggested earlier, they look similar, but there are significant key differences.
A credit card enables customers to make purchases for services and products, online and in mortar-brick shops. However, this will only be eligible for making purchases up to a certain limit. The card issuer will be responsible for making all payments on behalf of the customer. On the other hand, a debit card can be used to make purchases using the amount the cardholder has available in their bank account.
Here are seven major debit card and credit card differences to take a note of before choosing one for yourself:
In terms of credit cards, the issuer is responsible for making payments for the purchases made by the customers. It is a sort of loan that the customer takes from a credit card issuer. A loan that the cardholder repays in the form of monthly credit card bills or EMIs.
In terms of debit cards, for all the purchases that the customer makes, the amount will be deducted from the money deposited in the bank.
All banks issue debit cards. As soon as you open a bank account with a particular bank, you will be eligible to receive the bank account’s debit card. On the other hand, credit cards are issued upon the customers making an application.
You can get a credit card from any bank. But you will get debit cards only from banks to which your account is linked.
Credit cards have a 45 days’ credit period. If the customer chooses, they can also turn the entire credit amount into EMI. Bajaj Finserv RBL Bank SuperCard is one such credit card that offers the benefit of converting high-end purchases into affordable EMIs. If the amount isn’t paid on the mentioned date, you will need to pay an extra amount on the interest.
Unlike credit cards, debit cards do not have any credit period. As soon as you make any purchases, the amount will instantly be deducted from your account.
When you own a debit card, you get direct access to your account. For debit cards, there are usually two types of accounts – savings and current. Since the bank account is linked to the debit card, it is easy to access information – which is not the case with credit cards since they aren’t directly linked to your bank account.
When you make purchases or pay using your credit card, you will need to stick to the limit provided by the issuer. Credit card issuers might eventually extend your credit limit depending on your credit history and the time of repaying the loans. But a credit card does allow you to spend more than what you have.
Debit cardholders get the benefit of spending as much as they can. However, they will still need to stick to the amount that they have in the linked bank account.
If the customer fails to pay the credit card bills in time, they will be marked default. This will also lead to a massive penalty from the card issuer to the customer.
There is no penalty for a customer if they are debit cardholders, since they cannot pay beyond what their bank account contains.
Credit holders get monthly reports stating their credit card usage and mention the transaction reports. On the other hand, debit cardholders get all information in the passbook or can apply to receive the same via mail.
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