Difference Between Debit Card and Credit Card

Debit Card vs Credit Card

Both a debit card an a credit card offer financial benefits to you in the sense that both assist you in desisting you from carrying hot cash on hand while making purchases in merchant shops. Both of them allow you to go through the financial transactions without hassles. Yet they differ in a few ways.

A debit card also offers a facility that a credit card offers namely allowing money on credit but in a different way. A debit card is tied directly to your checking account in your savings bank. Therefore the money to the extent of which you make a purchase is debited from your checking account in your bank. If the transaction goes through for a day or two, then a kind of hold would be created on the amount due to the merchant in your checking account in your savings bank. Till that period when the transaction fully goes through you are not supposed to overdraw money from your savings bank account. Hence to protect you from the embarrassment of not providing enough funds in your account till the transaction goes through, the bank would create a hold on the amount due.

A credit card as the name itself suggests differs from a debit card in the sense that money is allowed on credit for you to make a purchase in any merchant shop. A credit card allows you literally to borrow money in small amounts initially to go through the process of purchasing goods from merchant shops. You can easily use the card to make some basic transactions. You will be liable to pay some interest to the borrowed money or the money given on credit card to you by the credit card concern after the expiry of a certain period of time. The period of time that is normally allowed is up to thirty days from the date of transaction or purchase. Once the time of repayment of the borrowed money exceeds the allowed time limit of 30 days, you are supposed to pay interest to the bank that has provided you with the facility of using the credit card. This period of 30 days is called as the grace period. You are advised to carry your balance in the credit card from month to month to avoid any liability of paying high interest. Hence it is important to note that the use of a credit card is akin to borrowing money from a financier.

Most people in the world prefer to carry either credit card or debit card with them when they travel. This is because of the fact they would not like to carry hot cash during travel. They would not mind to borrow money through a credit card or allowing a kind of hold on their checking account in their bank by using their debit card. All said and done debit and credit cards are very comfortable financial tools available to man these days. It is important that he should make the best use of them.