Difference between credit card and debit card: 100% Essential to know!
Difference between credit card and debit card: 100% Essential to know!/ Most of the time, you may have experienced similar features between these two options. Because of this reason, people have missed the chance to make the best decision in choosing the most suitable card based on the situation they are.
In addition to that, these 2 cards consist of the logo of their major credit cards company like MasterCard or Visa. Also, the cardholder has the facility to buy goods and services by using them at retailers. So, what is the difference between them? It is the most important factor that you must be aware of!
The difference exists in the source where the payment is drawn when the user is purchasing a product with it. For instance, the money will be deducted from your checking account when you are using the debit card. On the other hand, it will create a line of credit when you are dealing with your credit card and you have to pay the amount at a later date.
As well as that, you can enjoy a special benefit with debit cards. It allows you to have an overdraft line of credit so that you can cover overspendings too. However, credit cards do not provide this service and it will be denied if you try to spend beyond that credit limit!
Both cards have the same look. In simple words, a debit card is a great facility that provides you the chance to access your bank account without any requirement of a written paper of a check. So, you can ask for a card from your bank.
As we have mentioned above, a debit cardholder can do purchase with this card at any place where this facility exists. For example, you can use your card at shops that take Visa, if the card has the Visa logo.
The procedure of using the card is also the same. You have to give your PIN (personal identification number) and the signature.
In simple words, credit cards can be described as a debt instrument! There are high spending limits and lower ones so that you can choose the suitable type according to your worthiness. When you purchase goods and services, that amount will go to the outstanding balance.
Furthermore, the cardholder has 30 days to settle his debt. Unless the company will charge you interest according to your outstanding balance.
In contrast, these cards offer you many other benefits. Unfortunately, people are not aware of them. For instance, they provide the opportunity to earn bonus points too. (Please refer to our article about the benefits of the credit cards on Refoverload)
What is the best option?
It will be very important for you to get an idea of the advantages and disadvantages of credit cards and debit cards. Usually, all of us expect good control regarding the money and expenses. Then, the debit card will be a perfect choice! Why is that?
There are many reasons. A debit card has a relationship with an account. Some of them are prepaid and they load the fund by a financial institution. Especially, the payment will be deducted from your bank account but it does not happen with a credit card. Moreover, the interest won’t be a problem with this choice. That’s why it is not the best option. (We have described it in detail with another article on our site. Please refer it)
Debit cards Vs Credit cards
Imagine a person is purchasing a television from a local electronics for a price of $300 and he is going to use his standard debit card to settle the payment. So, he swipes the card and the bank places a $300 on the account immediately. Then, the shop sends the details regarding to the transaction. After that, the bank will transfer the funds to the relevant store within the next 1 to 3 days.
In the second example, let’s imagine someone is purchasing a television using a credit card. Again, he swipes it and the card company adds the amount into his outstanding balance. Difference between credit card and debit card: 100% Essential to know!