Difference Between Debit and Credit Card

Difference Between Debit and Credit Card

As per July 2019, the total transaction amount at POS terminals via credit cards was close to Rs.60,000 crore. While at the same time the transaction amount using debits cards at these terminals was around Rs.58,000 crore. This data shows that an increasing number of individuals in India are switching to credit cards from debit cards. Nonetheless, not many are aware of the difference between debit and credit cards. Knowing the features and benefits offered by both will enable them to use them responsibly.

Differences between debit and credit card

One of the primary differences between credit and a debit card is that the latter is linked to an individual’s savings or current account. With a debit card, the holder can only transact according to the balance left in their account.

On the other hand, a credit card is a type of short term personal loan. These come with a pre-set limit Individuals can carry out a financial transaction until this credit limit is reached.

Aside from this significant point, there are other difference between debit and credit cards. These differences are listed below –

  1.  Interest charges

No interest is charged on transactions with a debit card since the amount is deducted from the user’s account as soon as it is swiped at a PoS or ATM.

On the other hand, since credit cards are a type of unsecured personal loans, financial institutions charge interest. However, they allow a grace period of around 20 to 25 days. If you pay off the whole amount due within this period, no interest will be charged.  Failure to pay within this grace period will lead to high-interest accrual on your credit card bill. Accordingly, you should know how to reduce your credit card interest and save money.

Unlike debit cards, credit card users receive a monthly statement, which contains detailed information regarding their transactions.

  1. Cash withdrawal

Debit cards are also known as ATM cards since cardholders can easily withdraw cash from ATMs.

Even though credit cards allow cardholders to withdraw cash from ATMs, they have to pay interest and processing fees. Additionally, the cash individuals can withdraw is subject to the cash limit.

However, credit cards like the Bajaj Finserv RBL Bank SuperCard allow cash withdrawal from ATM without any interest for up to 50 days.

The company also provides pre-approved offers for a quick and hassle-free application process. Apart from credit cards, these pre-approved offers are available on business loans, personal loans, and on many more financial products. You can quickly check your pre-approved offers by providing a few necessary information like your name and contact number.

  1. Security features

Both credit and debit cards are used extensively for online transactions, which increase the risk of cybercrimes and fraudulent online activities.

Debit cards have minimum to no security features, which leaves cardholders to substantial risk. In case of fraud, they will lose their money from their account.

On the other hand, credit cards come with high-security features such as in-hand security and zero-fraud liability. Compared to credit cards, debit cards do not have such advanced cyber-security features.

  1. Others

Most lending institutions offer attractive reward programs on transactions with credit cards. One can accumulate and redeem these reward points to avail attractive discounts, gift vouchers and cash backs on shopping with partner stores. One can also make the initial payment for big-ticket items with the accrued reward points. These are some of the reasons why credit cards are better than debit cards.

Debit cards also come with reward programs; however, these are less compared to credit cards.

Aside from the above mentioned difference between debit and credit card, there are other reasons why credit cards are better than debit cards. Unlike debit cards, one can avail a credit card that is customised for their spending habits and requirements.

Credit cards also help in building up a positive credit history. However, cardholders have to use their credit card responsibly – this is one of the credit card rules, which customers should abide by.


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