Credit card and debit card both are small plastic cards issued by the bank. With the help of debit card, an account holder is able to access money anytime and anywhere whereas credit is used to make payment on a credit purchase.
Debit card
- Debit card means to deduct the money as the name itself describes the meaning of it.
- A debit card is a type of service provided by the banks to its clients to obtain goods and services from his saving bank account.
- In a debit card, money is deducted when an account holder makes use of it which is linked to the account holder's bank account number.
- An account holder is able to spend the money which is on his account, not more than that and when there is no money in an account, a debit card will be declined.
- A debit card is the same instrument like a cheque it means when an account holder uses it an amount automatically deducted.
- Bank charges fees on a monthly basis from the customers.
- A debit card is used to purchase goods, to transfer fund, e-banking, M- banking, to deposit fund and much more.
Credit Card
- A credit card is a type of service provided by the bank to its customers to make payment for the purchase of goods and services on credit.
- Credit card means money taken on a loan from the bank which must be repaid on time with the interest applied.
- In credit card, a payment is done by the bank as a third party to the seller on time.
- A credit card is given to an account holder based on the parameters like credit history, repayment capacity, income statement and debt.
- Fees are charged for the services and it is a monthly base.
- In credit card, banks usually allow a credit period of 30 days to repay a credit amount.
Features of Debit Card and Credit Card
- Both are small rectangle square plastic cards with a magnetic strip which holds information regarding the account, are issued by the bank.
- Both have 16 digit numbers which are different from the account number.
- Both are hassle-free, easier and fast instrument and an account holder has no need to carry money with him.
- Both are used to make purchases at the point of sale, over the phone, through mail order, and on the internet.
- On the back side of a card, both have a signature of the cardholder on the signature panel.
- No risk of theft and it protects against the fraud.
Difference between Credit Card and Debit Card
Meaning:
- A debit card is a type of service provided by the banks to its clients to obtain goods and services from his saving bank account.
- A credit card is a type of service provided by the bank to its customers to make payment for the purchase of goods and services on credit.
Payment:
- In a debit card, payment is done by the account holder immediately.
- In credit card, a payment is done by the account holder on a later date.
Bank Account:
- For issuing a debit card, there must be a bank account in the bank.
- For the credit card, there is no precondition to have an account in the bank.
Amount withdraws:
- An account holder is able to withdraw money up to the balance available in the account.
- A credit card holder can withdraw money up to the credit limit approved by the bank.
Interest and card bill:
- In debit card, there is no interest charged for using a debit card and no card bill at the end of the month for using a debit card.
- An account holder will get a monthly credit card bill for using in the last month with the prescribed rate of interest for using a credit card.
Connected to Account:
- A debit card is connected to an account holder’s saving bank account.
- In credit card, there is no need to connect a credit card with the card holder’s account.
Credit history:
- For issuing a debit card, a bank doesn’t need a history of an account holder and it doesn’t affect at all.
- For issuing a credit card, a bank needs credit history of an account holder and this is the most important parameter for issuing it.
