Credit and Debit Meanings and difference between them

Before jumping into differences between these cards, first, have a look at what kind of function they exactly perform.

What is a credit card?

It is a card which helps you in getting credit amount for whatever thing you wish to buy or spend on. It can be buying food in a restaurant or having a world tour trip too.

What is a debit card?

It is a card which is directly attached to your banking account and the amount you withdraw is taken out from your saving account. Thus it is necessary to be always updated with your debit details.

Difference between debit card and credit card are as follows:

  1. The duration of transaction varies in both of cards. The credit card operates within seconds with just a sign on the receipt; debit card process can take 4-5 days.
  2. The credit card does not operate on the pin system, whereas in ATM or any shops debit card is processed further with the help of a pin.
  3. Because of no set bar, a credit card can change you into someone who buys or spend extra which will eventually lessen your credit score and sometimes you can fall into deep valleys of debt. But debit card procedure does not process further if you do not have the required balance.
  4. It is convenient to use a credit card while travelling because keeping a chequebook or large amount of money will attract more problems. In addition credit card helps you in maintaining a credit score and it offers many features as well like staying in a hotel by using reward points.
  5. Another difference is credit card is always accredited in your account in the form of cashback or reward points. Many people who like to travel are certainly inclined towards cashback and reward points because it helps a lot while travelling. A debit card does not facilitate such reward points.
  6. The interest rate highly differs in both the cases. The debit card interest rate is less as compared to credit card. But a credit card interest rate is high which often exclusively increase the amount you have to pay if you fail to credit the amount in 30 days.
  7. Refund or return process in a credit card is processed in the earliest time. But in debit card, the request process takes 5-7 days to operate.

It is important to understand what kind of credit should be used. For example for buying some grocery items, stick to a debit card because for such small things, using a credit card will line up a great amount of interest if you are unable to pay it off at the end of the month.

Likewise, when you are travelling to many places it is important to know that whether they provide usage of both cards or not. Because using credit card frequently will subsequently increase the amount to a greater extent which will become hard for you to pay thus crashing your credit score and taking more money than you spent because of high-interest rate.

One of the most important things which should be done frequently is to check your balance information so that you can be updated about your account. This helps you in maintaining the record and keeps you aware of your own financial condition.