BASIS FOR

CREDIT CARD DEBIT CARD

COMPARISON

Credit card is issued by a bank or Debit card is issued by a bank

any financial institution to allow the to allow its customers to
holder of the card to purchase purchase goods and services,
Meaning
goods and services on credit. The whose payment is made directly
payment is made by the bank on through the customer's account
the customer's behalf. linked to the card.

Implies Pay later Pay now

The bank account is not

The bank account is a must for
Bank Account prerequisite for issuing a credit
issuing a debit card.
card.

The maximum limit of

The maximum limit of withdrawing
withdrawing money will be less
Limit money is determined according to
than the money lying in the
the credit rating of the holder.
saving bank account.

The holder of the card has to pay There is no such bill, the
Bill the credit card bill within 30 days amount is directly deducted
of every month. from the customer's account.

Interest is charged when payment

Interest is not made to the bank within a No interest is charged.
specified time period.

Definition of Credit Card

A credit card is a type of facility which allows its customers to purchase goods and services
on credit, and the payment is made by a third party (financial institution) on his behalf
immediately. The customer has to pay the credit amount to the third party at a later date. In
this regard, every month, the financial institution sends a bill to the card user for the amount
paid on his behalf. Usually the user is allowed a credit period of 30 days within which he can
pay the amount, afterwards, interest is charged at a prescribed rate.

Definition of Debit Card

A debit card is a type of facility provided by the banks to its customers to purchase goods and
services against his own saving bank account. So, whenever the transaction takes place, the
amount is deducted from the customer’s account. Here, the bank charges a nominal amount
every month for the use of the card. It can be used for purchasing goods, transfer of funds,
internet banking services, deposits, etc. Nowadays, ATM cum debit card is also available in
the market which allows you to avail all the facilities of the ATM card.
 Similarly like a credit card, it is also made up of plastic with a magnetic strip which contains
all the basic account details of the customer.

Key Differences Between Credit Card and Debit Card

1. For issuing the Credit card, the bank account is not the requirement of the bank, but in
the case of Debit card the customer must have a bank account.
2. The major difference between Credit Card and Debit Card is that, in Debit card the
amount is withdrawn from the bank account linked to it, while in the Credit card the amount
is not withdrawn from the account.
3. In Credit card the bank charges interest, whereas in the Debit card no interest is
charged.
4. The maximum limit of withdrawal in Credit card depends on the credit rating while
the maximum limit of withdrawal in Debit card depends on the cash balance in the account.
5. The rate of overdraft facility is low on the Credit card, but the rate of overdraft facility
is high in case of a Debit card.

Similarities

 Made up of plastic with a magnetic strip.

 Issued by a bank or financial institution.
 Provides basic facilities like withdrawals, transfer of funds and online payment.
 Charges are levied for the use of a card.

Conclusion

It is not easy for us to carry a huge amount of cash or a chequebook every time with us,  so
credit card and debit card are good facilities that helps to overcome such a problem. If you
have enough cash balance in your bank account, then you can choose the debit card, but if you
don’t have a bank account and your credit ratings are quite good, then you can choose the
credit card. It’s up to you, decide yourself? Which card suits you more, according to your
requirements.