Credit cards vs. Debit cards

Credit cards vs. debit cards

What are credit cards?

A credit card is a small plastic card which is issued to people to make payments. It allows the credit card holders to purchase goods and make its payments through credit cards.

What is a debit card?

Debit cards are almost similar to credit cards. This card is used to make payments without the tension of keeping instant money in hands. It takes money directly from the bank account and it saves you from buying money at interest rates.

Difference between credit card and debit card

Both credit card and debit card are usually considered to be the same as they both provide convenience. Both are accepted at same places. Debit card has a sign of credit card on them and these can be used anywhere where the credit cards are accepted.

The main difference between them is that the money from debit card is used through your banking accounts and credit cards use money from your line of credit. The debit cards offer the same convenience as credit cards but it works in a very different way than credit cards. Debit cards take the money from your bank accounts whenever you make a purchase on any good. This is done by making the amount hold of the purchase of any good. The merchant sends the amount of transaction made by the customer to the bank and the bank transfers the money from the customer’s account to the merchants account. This process can sometimes take days. The hold can even be dropped off because the transaction reach the merchants account. Therefore, it is very important to keep a check of all your transactions to avoid withdraw of your account and this can be done with debit cards.

On the other hand, a credit card that allows the buyers to take money in little amounts from the merchants. The credit card is used to make payments of some basic transactions. The credit card company charges a interest rate on your transactions. This process usually takes about 30 days before the interest is charged by the company.

You cannot use more amount of money than money present in your bank account in case of debit cards but credit cards allow you to use as much money as you like besides you do not take more money than the limit mentioned by the credit card company.

Debit cards require your signature as a proof but credit cards require your ATM pin as a proof. Debit card do not impose and interest rat but credit cards imposes interest rates.

Therefore, it can be seen that though credit cards and debit cards have almost same functioning. They are convenient alternative of cash payment immediately. Both have many advantages and disadvantages to each other but credit cards are much safer than debit cards. It offers great amount of security. However, the biggest disadvantage of credit card is that it imposes interest on each transaction and debit card is free from interest rates