Difference Between Credit Card and Debit Card (With Table)

Credit Card vs Debit Card

The key difference between a credit card and debit card lies in the fact that if a person is using and spending with his or her credit card, it means the person is taking a loan and he or she has to pay the interest in case of carrying the amount.

On the other hand, if one is a debit cardholder, then the card is connected to the bank account. After a transaction is being done one can withdraw the money right away by using a PIN.

If one has a credit card, then the accurate amount he or she is capable of spending will rely upon the current credit limit and the balance his or her card has.

After one reaches the credit limit, the person will not be able to use that card for any further purchase. But after paying off at least a part of the amount the person will be able to use the card again.

In the case of a debit card, as it is linked to the bank account, the funds will be pulled straight from the balance he or she has.


 

Comparison Table Between Credit Card and Debit Card (in Tabular Form)

Parameter of ComparisonCredit CardDebit Card
DefinitionWith a credit card, one can take a loan to make purchases and can pay back later.With a debit card, one’s money will get deducted to make purchases directly from his or her bank account.
PaymentThe credit card company will pay for the purchase and the cardholder has to pay the company.The cardholder has to pay for the purchase.
Source of BalanceThe card company is supposed to give the balance to the credit card and it will let the cardholder pay for any purchase. Meaning the credit card company is the source of the balance.The bank account linked to the debit card is the source of the balance.
InterestOne has to pay back the exact amount by its due date, otherwise, interest will be charged.No interest is going to be charged.
LimitThere is a pre-set card limit, until that the card can be used.There is no actual limit as the current bank account balance will let a cardholder use the money.

 

What is a Credit Card?

A credit card is known to be the medium of borrowing funds to use for any sort of purchase or investment. This card is supposed to have spending limits.

The limit can be a high-spending one or a low-spending one which depends on the cardholder’s creditworthiness. If a credit cardholder uses his or her card, the transaction amount will be added to the cardholder’s outstanding balance.

According to many credit card companies these days, a cardholder gets thirty days limit before any interests are going to be charged on the balance. No amount of interest will be charged if one does not pay back by the due time which is a month.

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If it is over a month, then after every purchase, interest will be charged. The credit card balance and the history of each payment are capable of affecting the cardholder’s interest rates.

There are liable credit cardholders who are capable of earning points and rewards from card companies. And it happens when they use their card in a positive and genuine way. This also helps the cardholders to gain a solid credit score.

Example of credit card
 

What is Debit Card?

If a person wants to have immediate access to a fund without the hassle of writing a check to withdraw balance then the person can use a debit card as it is linked to one’s personal bank account. Yes, a debit card and a credit card may look alike but they work differently and they serve different purposes.

A debit card can be used anywhere. Wherever credit cards are applicable, a debit card can also be used there as it is linked to one’s bank account. A debit card with the Visa logo will be accepted anywhere that accepts Visa cards.

The bank has the authority to put on a hold on a debit card, based on the amount of the cardholder has spent. The transaction of the money can happen right away or it might take 24 hours or more which depends on the amount of the purchase and the bank.

To use the debit card, the cardholder will get a personal identification number (PIN). This PIN number will come handy when the cardholder will need to withdraw money.

Example of debit card

Main Differences Between Credit Card and Debit Card

  1. It is not necessary to open a bank account in order to access a credit card. On the other hand, one needs to open an account to get access to a debit card as it is connected to the bank account.
  2. If one uses a credit card then the card company will pay the amount at that moment without any delay and it is quite the same as to someone who has given a loan to a user. And in the matter of the transaction of a debit card, the money will be taken from the present fund of the savings account of the cardholder.
  3. While using a credit card if any sort of delay happens in the matter of paying back the amount then the cardholder might need to pay interest. On the other hand, while using a debit card no amount of interest will have to pay by the cardholder.
  4. A credit cardholder will receive a monthly statement for the transaction amount that has been used and is given by the credit card company. In the matter of debit card, no monthly statement will be provided.
  5. A credit cardholder will have a credit period of the particular amount that has been lent to the user. And for a debit cardholder, there is no credit period, as the amount will be deducted immediately from the bank account.
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How to Remember the Difference Between Credit Card and Debit Card

Time Needed : 2 minutes

Remembering the differences is very simple, just follow our mind mapping guide given below:

  1. Associate the first word with a thing or item which you see daily

    For e.g.: Middle line in letter H for Horizontal

  2. Associate the second word with a thing or item which you see daily

    For e.g.: The two lines in letter V for Vertical

  3. Recall the two words daily two times

    During morning and evening bring up the two words in front of you and then recall the things that you had associated with each word.

  4. Repeat for 7 days

    Repeating this process for a week will help you remember the difference between words for a long time


 

Frequently Asked Questions (FAQ) About Credit Card and Debit Card

  1. What are the types of credit cards?

    There are different types of credit cards available as per your requirements. Some of those cards are listed below:

    • Standard Credit Cards
    • Rewards Credit Cards
    • Secured Credit Cards
    • Student Credit Cards.
    • Charge Cards
    • Balance Transfer Credit Cards
    • Low-Interest Cards
    • Prepaid Cards
    • Subprime Credit Cards
    • Business Credit Cards
    • Limited Purpose Cards

  2. How many types of debit cards are there?

    Debit cards are issued by the banks for existing bank accounts where the account holder can spend his existing funds of the bank account.

    There are commonly six types of debit cards which are listed below:
    • Visa Debit Card
    • MasterCard Debit Card
    • Maestro Debit Card
    • RuPay Debit Card
    • Contactless Debit card
    • Visa Electron Debit Card

  3. Which type of money is an ATM card?

    An ATM card is a card that can be used for many purposes, such as cash withdrawals, deposits, account information, and any other types of transactions.

    ATM cards have multiple names like client cards, cash cards, MAC (Money Access Card), or key cards.

  4. What is the full form of ATM?

    ATM stands for Automated Teller Machine. It is operated by an individual for cash withdrawals from their respective accounts or to check previous transactions and personal information of their accounts.

  5. What are the benefits of a platinum debit card?

    Platinum Debit Cards give higher limits on cash withdrawal in comparison with regular debit cards. It provides a higher limit for online shopping along with cash backs, rewards, loyalty points, etc.

    The benefits of a platinum debit card vary according to the bank as different banks give different features on cards.

  6. Which is better Visa or MasterCard?

    Both credit card companies offer similar features and usability. There is no such difference between Visa and MasterCard as both are used widely all over the world with the same usability.

    It actually doesn’t matter which card you’re buying or using as both give the same offers.

    Everything depends on the bank, which offers you the card as the interest rate, reward programs, value, and card features are set by them and not the company.

    Visa and MasterCard do not distribute their cards themselves as they are only the methods of payment.

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Infographic

Credit Card vs Debit Card

 

Learn More With the Help of Video


 

Conclusion

Sometime people may think that a credit card will allow the possibility to spend more than one should, in that case, a debit card is a better pick.

In other circumstances, if one is used to spending within a budget and is capable of paying the due on time every month then he is eligible and allowed to own a credit card.

If a cardholder knows and understands properly about what kind of service he wants then it will be quite easy for him to pick the right kind of card for him


 

Word Cloud for Difference Between Credit Card and Debit Card

The following is a collection of the most used terms in this article on Credit Card and Debit Card. This should help in recalling related terms as used in this article at a later stage for you.

Word Cloud for Credit Card and Debit Card

 

References

  1. https://upgradedpoints.com/debit-cards-vs-credit-cards
  2. https://www.creditkarma.com/credit-cards/i/debit-vs-credit/

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