Debit Cards And Credit Cards: The Difference

Debit cards and Credit cards may look similar, but their features and uses are very different. Knowing when and how to use each can help you build a stronger credit history while keeping your debt levels down.

Working Of Debit Cards And Credit Cards

		Credit Card	Debit Card
	Issuing	In Credit Cards some amount is given to you by the company issuing the card and you have to pay back all the amount or some amount every month.	In Debit Cards the account issuing institute provides you a card for your savings or current account.
	Deduction of Funds	Every time your credit card is used, the credit card company pays for any purchases made by the cardholder.	Every time your debit card is used, the amount is deducted from your own savings or current account.
	Credit Limit	You have a monthly credit limit on how much you can spend which will depend on your credit-worthiness and the kind of card you hold.	You can use your debit card up to the amount available in your bank account. The banks may provide a daily purchase limit on your card.

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Effects On Your Finance

	Credit Card	Debit Card
Interest Charges	You get up to 50 days of interest-free credit balance and to avoid interest charges you have to pay your balance amount by the due date. Different credit cards providing companies have different interest rates.	You don’t have to pay any interest charges on debit cards as the balance is deducted from your bank account.
Benefits/Perks	You are offered a huge range of benefits and perks on credit cards like cashback, gift rewards that can be converted into free flight tickets, discounts, and much more.	You are often offered cash backs, discounts on the purchase while using a debit card.
Funds Usage	When it comes to funds usage both the cards are equally capable and can be used at the time of purchase. You can use the credit amount in your account to make payments.	Debit cards can be used to make payments for any purchases. However, there are some websites or transactions which only allows the use of credit card.

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Security Features of Debit Cards and Credit Cards

	Credit Card	Debit Card
Stolen or Lost Card Liability	In the case of a credit card, you may report the theft/loss in time to avoid fraudulent charges. Most credit cards are offered 100% liability protection.	In the case of a debit card, you have to pay the liability to the bank which can be Rs. 4000 maximum if you notify the bank within 2 days from when the card was lost.
Protection from Frauds	In the case of a credit card, you are much more protected from frauds/theft since the balance is not withdrawn immediately. You can temporarily lock it via online banking or mobile SMS.	In the case of a debit card, you are asked to enter a PIN (Personal Identification Number) to verify the cardholder whenever payments are made. You can temporarily lock it via online banking or mobile SMS.

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