What is the difference between credit and debit cards?

The main difference between credit and debit cards is that credit cards have a fixed amount from the bank, while debit cards have the amount in your account. To make payments or withdraw funds from a debit card, you should have that amount in your account at the time of payment, but to make payments with a credit card, you can transfer the amount that you used later to the bank.

There are several types of payment cards; the most common are credit and debit cards. Both cards are available as Master, Visa, Amex, etc. cards. For most people who do not have a solid understanding of finance and economics, these two terms sound confusing; As a result, they find it difficult to tell the difference between credit and debit cards.

Key areas covered

1. What is a credit card - definition, use, advantages and disadvantages 2. What is a debit card - definition, use, advantages and disadvantages 3. What are the similarities between credit and debit cards - overview of the common features 4. What is the difference between credit and debit cards - key differences compare

key terms

Commerce, credit cards, debit cards

Difference Between Credit and Debit Cards - Comparative Summary

What is a credit card

In commerce, credit refers to liability, and it refers to someone vouching for your money to pay for it later. Banks also issue credit cards to customers so that customers can buy something at any time and pay that amount to the bank later. In short, it's like borrowing money from someone with a promise to pay for it later.

Difference Between Credit and Debit Cards

In addition, a credit card is not linked to any of your savings accounts, but the credit card account is issued by the bank for an amount agreed in advance. The cost of your payment will eventually be credited to the credit card account, which must be repaid in advance of a period specified by the bank. In addition to the amount you use, there are additional fees (usually the interest rate) as agreed between you and the bank. This amount will be sent to you as a monthly statement.

Key difference - credit and debit cards

This option gives the customer the advantage of making payments or buying things at any time using the credit account issued by the bank. However, you cannot withdraw cash from a credit card; For card payments, you can only make payments with a credit card.

What is a debit card

A debit card (also called a bank card , plastic card , check card ) is basically the electronic card in your personal account with the bank. You can use it to make card payments at the ATM or withdraw cash from your account at any time.

In addition, the amount you can use on a debit card is the same as the amount in your account; in other words; Money comes straight from the user's bank account. Hence, a debit card is simply an extension of your personal account (either savings, deposits, loans, loans, etc.). Difference between credit and debit cards_Figure 3

Debit cards can be used to pay for goods and services, and to withdraw money from cash or ATMs. Using a debit card is therefore a faster, safer and more convenient way to pay instead of always having cash in hand or going to the bank to withdraw cash from your account.

Similarities Between Credit and Debit Cards

  • Both offer the ability to use money through cards when there is no cash available.
  • Credit and debit cards bear the logo of card companies such as Visa, MasterCard, American Express (Amex) and we can shop for goods and services with both.

Difference Between Credit and Debit Cards

definition

A credit card is a facility provided by the bank that enables the customer to spend money on this credit card account at any time, with a contract to repay that money later. A debit card, on the other hand, is the electronic card in a customer's personal account that enables card payments or cash withdrawals at an ATM. This is the main difference between credit and debit cards.

Be

The amount of a credit card is determined by the credit card department of the bank, while the amount of a debit card depends on the amount in your personal account.

withdraw money

Withdrawals are also a key difference between credit and debit cards. A credit card can only be used to make card payments, while you can make both card payments and cash withdrawals from a debit card.

password

No password is required to use a credit card, but a password is required to use a debit card, ie when withdrawing cash from an ATM.

balance

The balance or the money to be repaid to the bank by credit card will be sent to you as a monthly statement. However, you need to update your personal account to see how much money has been spent. This is another difference between credit and debit cards.

Charge

Another difference between credit and debit cards is that the credit card will charge your bank account at some point later, while the debit card will charge your bank account directly.

advantages

Since the credit card gives an additional amount, the customer has the advantage of being able to use this amount at any time, whereas this is not the case with a debit account since it is your own money.

disadvantage

Since sometimes you cannot withdraw cash from a credit card, this is only limited to card-based businesses. However, because you can withdraw cash from a debit account, you will not face this problem. This is another difference between credit and debit cards.

diploma

Banks offer their customers the option of paying with cards and withdrawing cash. Credit and debit cards are the two most popular card payment methods in the world. The main difference between credit and debit cards is that credit cards have the amount specified by the bank, while debit cards have the amount in your account.

Reference:

1. “A Mastercard® debit card for every need.” Debit card | Mastercard, available here .2. "Debit Card." Wikipedia, Wikimedia Foundation, January 19, 2019, available here. 3. "Credit card." Wikipedia, Wikimedia Foundation, January 19, 2019, available here .

Image courtesy:

1. "3680209" (CC0) via Pixabay 2. "1080074" (CC0) via Pixabay 3. "1730085" (CC0) via Pixabay

About the author: Upen

Upen, BA (Honors) in Languages ​​and Linguistics, has academic experience and knowledge of international relations and politics. Her academic interests are English language, European and Oriental languages, internal affairs and international politics, and psychology.