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Debit Card vs Credit Card

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Difference Between Credit Card and Debit Card

Debit and credit cards are the most popular modes of contactless payments. While physically, the two types of cards look almost similar, the difference between credit card and debit card is very evident when it comes to their features and mode of operation. The primary difference between debit card vs credit card lies in the fact that when you use a debit card, the money is debited directly from your account, while in the case of a credit card, it gets deducted from the credit card limit that is set by your credit card issuer.


Difference Between Credit Card and Debit Card


However, before we deep-dive into what is the difference between credit card and a debit card, let us take a look at the basics.

What is a Debit Card?

A debit card is a card that is issued by a bank against your current or savings account. It allows you to spend the money saved in your account without you having to carry cash around. When you use a debit card to swipe at a POS machine, use it to withdraw money from an ATM, or choose it as your payment mode to shop online, the funds are digitally debited from your account and your balance gets updated. It is important to remember that because you are spending only your saved funds, you can never overshoot the available balance in your account.

What is a Credit Card?

A credit card works on the principle of ‘buy now, pay later’, which means that you can use the card to borrow funds for your purchases now and pay them back at a later date. A credit card comes with a predefined credit card limit, which is the amount you can borrow on the card. This is decided keeping several things in mind such as credit score, credit history, age, income, etc. You must at all times purchase within this set limit and pay back the borrowed funds within the stipulated time. Once the credit card bill payment comes through, the credit limit is replenished. However, if you fail to clear your dues, you are required to pay interest on the borrowed sum. You can also opt to convert the outstanding balance into EMIs. The transactions made using credit cards can help you earn reward points, cashback, discounts, offers, etc.

Now that you understand the definition of credit card and a debit card, let us take a look at the main differences between the two.

Difference Between Credit Card And Debit Card


Credit Card

Debit Card

Credit Limit

Has a set monthly credit limit

Does not have any monthly credit limit

Source of funds

Funds are borrowed from the credit card issuer

Funds present in Savings bank account or current account

ATM withdrawals


Not chargeable


Up to 50-days of interest-free credit

No interest charged

Annual fees

Annual fee may or may not be charged

No annual fee charged


Can be used on all merchant outlets and online

May not be applicable on some websites

Eligibility criteria

Credit card eligibility depends on multiple factors, including salary, credit history, place of stay, etc.

Eligibility criteria require you to have a bank account

Security features

Zero liability insurance (some cards)

No zero-liability insurance


Accumulates all the transactions in a billing cycle and generates a final bill which is to be paid within a stipulated time period

No bill is involved as money is spent directly from your account


Comes with privileges such as discounts, cashbacks and other rewards

Limited privileges

Credit Card vs Debit Card

Credit Card vs Debit Card

Should I Choose a Debit Card or a Credit Card?

Now that you know the difference between debit and credit card, the question arises which card should you apply for? To help you make an informed decision, we have listed the advantages & features of both debit and credit cards, so that you can check which one adequately matches your financial needs.

Advantages of Availing a Debit Card

Advantages of availing a Credit Card

  • The card is directly linked to your current or savings account, which makes payments easy

  • The card allows you to access your saved money digitally.

  • Along with cashless purchases, debit cards also let you withdraw money free of charge anytime from the bank’s ATM

  • No risk of debt as you can only spend the money you have actually saved.

  • No annual fees or interest charges are involved.

  • Getting approved for a debit card is easier.

  • Credit cards allow you to spend more than you have.

  • You can pay the amount spent in a billing cycle at a later date, which is known as the payment due date.

  • If you are unable to pay by the due date, you can convert your purchases into EMI, however, you will be charged interest.

  • As most e-commerce sites provide attractive credit card offers on purchases, it is ideal for online shopping.

  • Paying your bill on time helps you build as well as maintain a healthy credit score and credit history which can be useful in getting approved for loans in the future

  • You can earn reward points against your credit card purchases which you can redeem against cashback, gift vouchers, discounts and more.

  • If there is a fraud transaction on your credit card, you can notify the bank and not have to bear the liability, as the transaction will be reversed immediately.

  • Some credit cards offer additional benefits such as airport lounge access, interest-free loans, insurance cover, indemnity cover, etc.


As mentioned above, both credit and debit cards come with a host of advantages. However, they have their set of limitations too. Listed below are the limitations to a credit card and a debit card.

Limitations to a Credit Card

Limitations to a Debit Card

  • Credit cards come with added charges such as joining fees, annual fees, interest charges, late payment fees, etc.

  • Deferring on your bill payments can incur heavy penalties or interest charges

  • Going overboard your credit limit could lead to accumulation of debt

  • The deduction from your account is instant making it difficult to keep disposable cash in your account without proper planning

  • Limited protection as compared to a credit card

  • No monthly statements are provided making it cumbersome to track the transactions

Thus, it is only after going through all the pros and cons of a debit card vs credit card that one should make a decision.

Apply for a Credit Card at Finserv MARKETS

If you are looking to apply for a credit card, the Finserv MARKETS platform is the best place to get one. Here, you can find every type of credit card from some of the most popular banks to match your lifestyle needs. Whether you are looking to save on fuel costs, enjoy discounts on shopping, get offers on movies and flight tickets, there is something for everyone! Even, students can avail amazing benefits using dedicated student credit cards. You can use the card to effortlessly convert your purchases into EMI, while also enjoying rewards, discounts, cashback and much more! So, what are you waiting for, go ahead and get a credit card from Finserv MARKETS, today with these steps:

  • Visit the Finserv MARKETS website

  • Browse through the list of credit cards available on the website

  • Choose a credit card that best suits your needs

  • Check eligibility for your desired card and apply

FAQs on Difference Between Credit Card And Debit Card

  • ✔️What is the difference between credit card and debit card?

    The primary difference between debit card vs credit card is the fact that when you use a debit card, the funds are directly debited from your account. On the other hand, in the case of a credit card, the amount gets deducted from your credit limit that is set by the credit card issuer.

  • ✔️Which is the best debit card or credit card?

    There are a variety of credit cards as well as debit cards available in the market that come with specific features and benefits. Depending on your financial needs, lifestyle, credit score and credit card eligibility, you can choose a credit card or debit card that best suits you best.

  • ✔️Which is safer: credit or debit card?

     When it comes to a debit card, the funds are directly debited from your account. Thus, there is no threat of incurring debt due to any interest charges or late payment fees, as is in the case of a credit card. On the other hand, certain credit cards offer lost liability protection against fraudulent activities. This is much more secure than a debit card, as any fraudulent activities could lead to irreplaceable damage or loss of funds directly from your account. Thus, both credit cards and debit cards come with their own set of pros and cons. Therefore, the decision to opt for a credit or a debit card must be made after thoroughly considering all your financial liabilities, spending behaviours, lifestyle, and eligibility.