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    Debit Vs Credit Card

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    Preeti
    A credit card allows purchases on credit from a financial institution, with payment due monthly. A debit card deducts purchases directly from a linked bank account. Key differences are that credit cards don't require a bank account, have higher spending limits based on credit ratings, charge interest on unpaid balances, and provide monthly bills, while debit cards immediately deduct from funds in a required bank account and don't charge interest.

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    Debit Vs Credit Card

    Uploaded by

    Preeti
    205 views3 pages
    A credit card allows purchases on credit from a financial institution, with payment due monthly. A debit card deducts purchases directly from a linked bank account. Key differences are that credit cards don't require a bank account, have higher spending limits based on credit ratings, charge interest on unpaid balances, and provide monthly bills, while debit cards immediately deduct from funds in a required bank account and don't charge interest.

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    Debit vs Credit Card

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    A credit card allows purchases on credit from a financial institution, with payment due monthly. A debit card deducts purchases directly from a linked bank account. Key differences are that credit cards don't require a bank account, have higher spending limits based on credit ratings, charge interest on unpaid balances, and provide monthly bills, while debit cards immediately deduct from funds in a required bank account and don't charge interest.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    205 views3 pages

    Debit Vs Credit Card

    Uploaded by

    Preeti
    A credit card allows purchases on credit from a financial institution, with payment due monthly. A debit card deducts purchases directly from a linked bank account. Key differences are that credit cards don't require a bank account, have higher spending limits based on credit ratings, charge interest on unpaid balances, and provide monthly bills, while debit cards immediately deduct from funds in a required bank account and don't charge interest.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 3

    Comparison Chart

    BASIS FOR
    CREDIT CARD DEBIT CARD
    COMPARISON

    Meaning Credit card is Debit card is issued by a bank to


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

    Implies Pay later Pay now

    Bank Account The bank account is The bank account is a must for
    not prerequisite for issuing a debit card.
    issuing a credit
    card.

    Limit The maximum limit The maximum limit of


    of withdrawing withdrawing money will be less
    money is than the money lying in the saving
    determined bank account.
    according to the
    credit rating of the
    BASIS FOR
    CREDIT CARD DEBIT CARD
    COMPARISON

    holder.

    Bill The holder of the There is no such bill, the amount


    card has to pay the is directly deducted from the
    credit card bill customer's account.
    within 30 days of
    every month.

    Interest Interest is charged No interest is charged.


    when payment is
    not made to the
    bank within a
    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.

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