Hamara Paisa

Debit Card vs Credit Card

Debit Card vs Credit Card

16 January 2018

Debit Cards and Credit Cards both look similar, both having 16-digit card numbers and a year of expiry and a 3 digit CVV (Card Verification Value) number on the back of the card.  While they resemble each other features of debit card and credit card are very different.

Debit cards are directly linked to the bank account of the user.  Money for the debit card transactions is immediately debited from your bank account which is linked to the debit card. These debits are however subject to maximum withdrawal or purchase limit per day decided by the bank.

Credit cards on the other hand are similar to a line of credit or loan offered by the banks and are linked to a credit card account that has a pre-defined limit.  Credit cards are issued by the banks on the basis of eligibility and credit history of the applicant. Once used, the bank pays the amount to vendor and users are required to pay back amounts to the bank within a time period.

Credit card offers borrowed money which you must pay back in total at the end of your statement period or you will be charged an interest.

In the case of debit card, it is not permissible for you to use money which is not in your account unless you have an agreed overdraft which will also be subject to an interest charge.

Credit cards are known for offering more benefits and rewards as compared to what debit cards offer. A credit card is preferable choice for people having good financial discipline as they can benefit from all the rewards. However, for people who are more likely to use cards without proper planning for repayment or are impulsive shopaholics; a debit card is a better option to prevent spending beyond your means.


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