While both credit cards and debit cards offer you the same level of convenience, eliminating the need to carry cash. There is a slight difference between these two payment modes.
What is a Debit Card?
Debit cards help you withdraw money directly from your savings account whenever you make any purchase. Even when you withdraw money from ATMs or swipe your card at stores, you need to provide your debit card PIN. However, certain merchants also allow you to use your debit card without requiring a PIN.
Facts:
- A debit card is directly linked to your checking account.
- It can be used as an alternative to a credit card.
- You need your PIN to complete the transactions.
What is a Credit Card?
A credit card enables you to borrow money against a line of credit, which is known as your credit limit. You use this card to make basic transactions, which are then reflected on your bill. You must know that credit cards have high interest rates, their balance and payment history do affect your credit score.
Facts:
A credit card offers you a line of credit that can be accessed with your card.
You need to pay interest on the purchases within 30 days.
Difference:
A credit card can be used for completing certain transactions like renting a car or buying items online without any need of carrying cash. But in this, the amount is borrowed from the bank to make the transactions.
Debit cards also offer the same convenience but without borrowing money to complete the transactions. It deducts money directly from your savings account.
Also Read: How do Credit Cards Work?
