Credit cards and debit cards help in online and offline transactions. It is estimated that at least 2 in every 5 transactions are carried out by a debit or credit card. In fact, they look the same – have a 16 digit number, CVV number, name of the cardholder and expiration date. But, there are many differences between credit cards and debit cards. Read on to know the differences and compare the pros and cons.
A credit card is provided by banks and NBFCs to the cardholders with a pre-set credit limit. You can make purchases using credit and repay the amount with interest. Additionally, credit card issuers allow holders to withdraw cash (line of credit, LOC) accessible by ATM or credit card convenience checks. Often LOCs carry higher rates of interest. Every credit card has a borrowing saddle point which depends on the user’s credit rating.
Debit cards are modes of withdrawals and transactions whereby cardholders can withdraw money from ATMs or perform online transactions. They perfectly substitute carrying physical cash or checks for purchases.
Debit cards have purchase and withdrawal limits beyond which daily transaction is barred. Users can access their debit cards with a PIN, and a small fixed charge might be levied on transactions from ATMs of different issuers.
|Credit offering is repayable at a future date.
|Mode of transaction or cash withdrawals
|Timely payments improve one’s credit history.
|Payments are possible as long as cardholders have enough balance and do not cross the daily limit.
|Purchase requires a signature.
|Requires 4 digit PIN
|Users need to pay additional interest if they do not pay the borrowed amount monthly.
|Users pay an additional fee if used in an ATM by a different issuer.
|Good for hotel reservations, car rentals, purchasing electronic items on EMI, etc.
|Good for daily use because it helps stay within budget.
Also Read: 10 Best Credit Cards For Online Shopping
Contactless payment is the need of the hour. Users do not need to carry huge amounts of cash to chase expensive items. Instead, they can use their credit or debit cards. Now that you know the difference between a credit card and a debit card, you can decide if you should use a credit or debit card for online and offline purchases, depending on your requirement.
Ans: Although both credit and debit cards look similar, they perform very differently. Debit cards require users to have a balance equal to or less than/her account balance. Credit cards help initiate transactions based on one’s limit and credit score.
Ans: Debit cards can be used to perform net banking and UPI transactions. They can also be used to perform transactions directly.
Ans: Firstly, one should read the terms and conditions. Then, one can call customer service and ask them to deactivate the card. Users can clear all transactions and destroy the card thereafter.
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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