Differences Between Debit and Credit Card - Easy Explanation

Whether you know the function of a debit or credit card, you probably have seen people using it in a mall or shop or in an ATM. In our society credit or debit card has been so prominent that almost all businesses offer payment methods like debit or credit card. A debit card or credit card is a substitute for paper money. This card contains money, either stored or loaned out from a bank.

Differences Between Debit and Credit Card - Easy Explanation

Debit card

In order to own a debit card, one must have a checking or savings account on a bank. The debit cardholder can only pay when he or she has money in his or her account. Taking a loan with a debit card while purchasing something is not allowed.

Credit card

The credit card doesn’t require a checking or savings account. In addition, the bank allows the credit card holder to loan out some money to purchase while they have no money in their account.

The expense of the product or service is paid by a credit card. Each time an expense by a credit card while the account is empty is taken as a loan out some money and the bank takes the record of the loan.

At the end of the month, the bank comes to ask for the money that was loaned. If the person fails to pay the bank when the month is up, bank charges a late fee or an added interest rate which continues to accumulate the longer someone fails to meet the deadline.

Being able to pay back on time full amount of money contributes greatly ones credit score which is extremely important as significance one's financial stability.

A credit card comes with a credit end line which has a spending limit. Credit card user can take the advantage of spending advance but only to the limit. But you can’t do that with a debit card.

Security and interest rate

Most people believe the debit card is easy to use and track. But there is some security issue and no reward of having it. But the credit card is totally opposed to it. The reward totally depends on If the money is paid back with responsibility. But the interest rate on your credit is very higher than a debit card.


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