In today’s times, it is hardly unusual or even a luxury to own credit cards and debit cards. Both are small pieces of plastic that are embedded with a uniquely identifiable magnetic strip. All debit and credit cards are also assigned a unique 16 digit number to identify them.
Debit cards are issued by banks to all customers who hold an account with them to provide transaction ease and also facilitate a cashless economy.
The first difference between debit card and credit card is that not everyone is eligible for a credit card. Credit cards are issued by the card provider upon request and after the customer passes through the necessary credit checks.
Debit cards essentially allow you to access money that you have deposited with your bank, which is already in your account.
The second difference between debit card and credit card is that, with credit card, you use the bank’s money, unlike in debit cards where you use the money in your own account. Credit cards offer you a line of credit so that you can make a purchase but make the payment for that purchase within a stated time period.
From a point of view of spending safely and wisely, debit cards score, and are especially beneficial to compulsive shoppers who may buy indiscriminately on credit without factoring in their ability to repay.
On the other hand, credit cards may offer users a number of lucrative deals in the form of points accumulated per spend, money back options and even the possibility of redemption of points accumulated for air travel and so on.
Also, when it comes to an assessment of your credit standing, most banks, and financial companies use credit card payment details for verification rather than debit card usage. Hence, one of the most significant difference between Credit Card and Debit Card is that the Credit Card history can help you build your credit score, if the credit card is used wisely.
From a legal and safety standpoint, if you misplace your debit card and it is used fraudulently, the money is immediately debited from your account and you may have to go through a long process of verification before some or all of the money may be returned, that too contingent upon the extent of the bank’s liability. However, with a credit card, even if you lose or misplace a card, you can inform the credit card provider who will immediately block the card, thus reducing your liability.
Irrespective of the differences, debit cards and credit cards offer their own respective benefits, it is important to be responsible in using your credit card.