I was travelling from Mumbai to Pune by train. Rainy season, beautiful scenery, lush green Sahyadris and beautiful waterfalls. I was seated next to a cheerful elderly gentleman. Both of us were admiring the scenery as the train passed through Lonavala. “Isn’t it beautiful?” I replied with a smile and nodded. As the train left Lonavala, he turned to me and said, “Beta, I have a question, might seem really stupid, would you care to answer?” “Sure, please go ahead,” I replied. “I am trying to understand the exact difference between a credit card and debit card. Thing is, I have both and sometimes get confused which to use when.”
The question had never occurred to me before this. Like most of my generation that started banking with private banks in India, a debit card was the first thing any bank would provide as part of my account opening kit. The use case for a debit card was simple – Walk into an ATM, dip the card, enter your PIN, enter amount and withdraw cash. A great alternative to the long lines one had to stand in when I’d accompany my grandfather to his PSU bank. Although, a debit card can also be used to transact at merchant stores or online, my instrument of choice for payments was always a credit card. Except when the payment gateway would charge much higher for a credit card vs. a debit card or net banking.
Why should one use credit cards and not a debit card for transacting at merchant stores or online, you’d ask? The answer is simple – reward points that can be redeemed, exclusive offers and benefits. One place where you don’t want to use your credit card – unless off course it is an emergency – is the ATM machine. The interest rate that you will be charged is extremely high! That is till I got the Bajaj Finserv RBL Bank 4 in 1 SuperCard. I can withdraw cash up to a certain portion of my limit at zero interest! Isn’t that cool?
Coming back to the question, difference between credit card and debit card. It’s simple dummy (I didn’t say that to the elderly gentleman) – use a debit card to withdraw cash and at a payment gateway where you have to bear transaction fees and use a credit card for your shopping, be it online and offline – “So while you shop for aunty, not only do you save because you have an XYZ credit card offer, but you also get reward points which you can redeem to buy supercool headphones to listen to Mohd. Rafi or Kishore Kumar. And whatever be the case – never disclose your OTP or PIN to anyone over phone or in person. Banks never ask you for the same either. Also, always swipe your credit card only at reputable merchant stores or websites as precaution from card frauds.”
“Hmm. I knew some of these things. But not all. Thank you for clearing it out for me. I’ll definitely take care at the ATM machine. My heart won’t be able to bear the shock of high interest rates at this age,” he joked.
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