Why do they look alike if they are so different?
Do you feel the same?
If so, then don’t worry! It’s a problem for many.
Many of us often get muddled between a credit card and a debit card. However, the difference must be made clear, so we are here.
You can make a payment with a credit card or debit card. But, the difference between debit and credit cards lies in their norms and procedures. Here, we will discuss them and provide you with all the details you need to know.
A debit card allows you to make payments from your money. It deducts the money directly from the current or savings account. It is most beneficial when issued by payment processors like visa cards, RuPay cards and MasterCard. Three types of debit cards are Standard debit cards, Electronic Benefits Transfer cards, and Prepaid Debit Cards. Each of them has its different specifications.
A credit card is issued when the bank allows the individual to borrow funds. The money has to be paid back with a fixed rate of interest. Credit cards are typically standard cards, premium cards, reward cards, charge cards, balance transfer cards, and secured cards. They have their spending limit and perks.
Debit cards and credit cards differences have a long list. They are classified on various footings and perform different functions. Lets learn about Difference between Credit Card and Debit Card!
The first difference between credit cards and debit cards is based on the definition. Its definition mentions that a debit card allows you to make payments from your savings. You can make payments or transfer funds only through your current and savings accounts. In contrast, a credit card is a loan the bank gives you. You have to pay a fixed interest on it.
The credit card and debit card difference is also based on the source of funds. In the case of a debit card, you are the source of all your payments. The money is deducted from your savings. When discussing credit cards, the financial institution or the bank takes care of all your expenses. However, it has a charge for its services.
You have more spending advantages with a credit card than a debit card. The bank bears the first cost while making a payment through a credit card. But, when using a debit card, you must make a payment yourself. Here, you have a limit on your spending. But, you can even pay more than you have used a credit card.
The credit card vs debit card story is a bit tricky here. Whether you use a credit or debit card to make a purchase, you must bear the expenses. With a debit card, you make a direct payment to the vendor, and with a credit card, you make an indirect payment. The bank pays for you first, and then you must pay the bank.
Another difference between credit cards and debit card depends on the payment made. Does it mean you have to make a payment after using any of the two?’
The answer to the question is ‘Yes’ in the case of credit cards. You must make a monthly payment as you borrow the bank’s money. On the other hand, there are no monthly charges on any transactions through debit cards. It is because you are using your own money here.
Credit cards and Debit cards have different functions to perform. Consequently, they have markedly different fees and charges. Debit cards have a simple fee structure. They only have annual costs and a pin registration fee. In contrast, credit cards have multiple charges.
They have joining fees, annual fees, and late payment fees. Bounced cheque fees are also a part of its charges.
You must pay interest if you do not pay back the borrowings or debt taken from the bank. You have to pay back the amount when payments are made through credit cards. The interest piles up if you fail to do so.
But, when you pay through a debit card, there is no interest fee. It is because you are transferring funds from your account. These payments do not require to be repaid.
You get various perks when choosing a credit card and debit card. Using credit has comparatively more privileges than a debit card. It offers you many cashback offers, flight offers, gifts, and more. The amount of gifts and offers depends on the package that you choose. Premium cards and rewards cards are loaded with luxury gifts and rewards. Debit cards, too, have such facilities but at a slower pace.
The Jupiter Money’s Savings Account has all the privileges mentioned above. Its real-time reward services on all debit card and UPI purchases. The rewards are exclusive and instant.
Studying the difference between Credit cards and Debit card says they have their own pros and cons. You can choose any of them depending upon your requirement. For instance – if you have spending issues or want to make a cash withdrawal, you should select a debit card. Spending issues occur when you can’t control your expenditures. You will limit yourself from overspending if you make a payment through a debit card.
Similarly, if you withdraw from your debit card, you will be taking out your saved money. Hence, there will be no extra charges involved. The Debit card on Jupiter gives you a 1% reward on all purchases. It has live, stress-free and super-secure card controls.
The services are fee-free with no annual charges.
Unlike that, if you want to make online transactions or shop for something or have to go on a vacation, you should choose a credit card. A credit card will give you multiple advantages and the EMI option.
Now, when we know the difference between a debit card and a credit card, we can say that credit cards and debit cards are poles apart. They have different tasks and features. But, both of them are the bare essentials for any financial institution. They are engrossed with other perks and loopholes. Choosing any one of them depends on the need of the hour. They are distinguished depending upon the definition, payment method, interest, privileges, and payments. You can tap any of them after looking at the current requirement.
You can make payments through your credit card. But, you cannot transfer money from a credit card to any bank account.
You can make payments from both charge cards and credit cards. The primary difference is that a credit card allows you to hold the payments, but you must pay the entire borrowing within a month when paying through a charge card.
The facility is applicable sometimes. It is known as a credit card cash advance. It allows you to make a withdrawal through a credit card but up to a specific limit.
Yes, you can apply for different cards. But, it depends on whether the bank allows it to have it.