Have you ever been confused about the difference between a credit and a debit card? These cards looks similar and both offer convenience and eliminate the needs to carry huge cash around. This post will give us details on the difference between credit and debit card relax and read through.
What is a Credit Card? A credit card is a form of loan in which the cash you spend is actually borrowed from the card issuer or provider rather than debited from your personal account like a debit card.
When you apply for a credit card, you apply to borrow money from the card issuer, usually a bank, society or any other corporate bodies. The issuer then looks at your credit history to consider your application if favourable or adverse and if you have a low credit score you could be refused credit, or perhaps given a less attractive deal on an interest rate.
If you have a good credit rating, then you will be accepted and the bank will set a credit limit, which is the maximum amount you can spend on the card. The card company will send you a statement every month, detailing any transactions on your card, plus the amount owing. It also provides details on the minimum payment you need to make (this depends on how much you have as your balance) and the payment due.
What is a Debit Card? A debit card is a card that allows you to make purchases either in person or online securely unlike a credit card a debit card draws directly from your checking account. You’re not borrowing; the money on your debit card is your own. And you can use it to access your cash at ATMs. Debit cards work with mobile payment platforms like Apple Pay, as well as with many money transfer apps such as Venmo and Square Cash, etc.
Difference between Debit Card and Credit Cards
Debit cards are used to pay for goods in shops and to withdraw money at cash machines. The money is automatically taken from your current account when you spend it, so you must have enough money in your account or an agreed overdraft to cover the transaction or expenses incurred.
Credit cards aren’t linked to your current account and are credit facility that enables you to buy things immediately, up to a pre-arranged limit and pay for them at a later date. The cost of the purchase is added to your credit card account and you get a statement every month to show all transaction details and balance as at that period of time.
When you use a debit card, the money is deducted from your checking account either by purchasing item physically, using the POS or withdrawing cash from the ATM.
With a credit card, you’re borrowing money to be repaid later after a stipulated period of time stated by the card issuer.
Credit Cards are not required to be connected to a checking account because of its credit facilities.
Debit Cards are connected to a checking or savings account of the holder and must be funded before been used for transactions.
The application process of a credit card is somewhat difficult, depending on one’s credit score and other details.
The application process of a debit card is Easy, with basically no barrier to receiving a debit card.
If a credit card bill is not paid in full, interest is charged on the outstanding balance. The interest rate is usually very high.
For a debit card No interest is charged because no money is borrowed from the bank or issuer of any instutution.
At the end of this write up i strongly believe that we can vividly say the difference between a credit card and a debit card. For any further question or complain call the number in our contact page or send a mail too or probably chat us from the blog page we will attend to you swiftly.