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.
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.
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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.
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.
Particulars |
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 |
Chargeable |
Not chargeable |
Interest |
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 |
Usage |
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 |
Billing |
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 |
Privileges |
Comes with privileges such as discounts, cashbacks and other rewards |
Limited privileges |
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 |
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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 |
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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.
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
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.
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.
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.