About Credit Cards and Debit Cards and their Differences

The best credit cards in India come with several benefits for cardholders. More Indians are getting into the credit card trend than ever before. However, there are still some people that are apprehensive about credit card use.

 That said, several Indians are aware that digital payment offers transparency and contactless payment. Currently, debit cards are offered to bank account holders and make great digital tools. 

Nonetheless, there are pros and cons of debit card and credit card use that you should know about. By using either of these types of cards, you don’t have to carry around a bulk of cash, and as digital contactless payments go, these are the most proficient ways to pay. 

You may think that a debit card suffices to meet payments, but judicial use of a credit card can make your life even easier while providing you with a host of benefits that debit cards don’t. For instance, the Bajaj Finserv RBL Bank SuperCard offers you many uses with just one card, serving as a regular credit card, as well as cash, EMI, and loan card. 

While debit cards and credit cards are accepted at the same places, they are inherently different. They look similar, and both work with advanced contactless Wi-Fi technology. However, the fundamental difference between them lies in how funds are pulled out of each. 

When you swipe your debit card that is linked to your bank account, funds are immediately withdrawn from your savings account. On the other hand, when you swipe a credit card, funds are loaned to you from the card issuer (banks or finance companies). 

Debit Cards 

Debit cards offer convenience when you pay for goods and services but work differently than credit cards. A debit card is linked to your savings account. Debit cards withdraw cash directly from there when you swipe your card to make purchases. 

While making payments using your debit card, you need to make sure you hold enough funds in your bank account to use it. Moreover, when you use a debit card, you don’t get a line of credit, and your money is withdrawn immediately. 

You can use your debit card to withdraw cash from your own bank account at ATMs, as well as purchase goods at retailers and pay for utilities. The differences between credit cards and debit cards, as well as the advantage of debit cards, are listed below.

•  Your credit history will be unaffected by debit card use, as there is no chance to default on payments since you are technically paying with funds in your bank account. In case you default on credit card payments, you will have to pay penalties and interest.

• You won’t have to pay any extra charges, late fees, or interest on purchases made with your debit card, since the money you are spending is your own. A debit card only makes purchases convenient by letting you avoid carrying cash around.

Credit Cards

A credit card is also issued by a bank or a finance company, and allows you to borrow money to purchase goods and services against a line of credit. Each credit card comes with a credit limit, beyond which you cannot use funds. 

Some of the best credit cards have high credit limits, depending on your financial health and creditworthiness. You can use a credit card to make purchases and spend large amounts, which is beneficial during an emergency. 

The amount you spend on your credit card isn’t dependent on funds in your bank account, but at the end of the credit period or the billing cycle, you must settle the bill. Here are some features and advantages of using credit cards.

• You don’t feel the pinch of your own cash being spent at the time of purchase, but you will have to pay the credit card company/bank at the end of your credit period.

• Your credit period can last anywhere from a month to forty five days, depending on different cards, the issuer and your financial status. 

• If you don’t settle your credit card bill on time, or settle only a part of it, any outstanding balance will be carried over to the next billing cycle. Moreover, you will have to pay a penalty and interest every month that you fail to settle what you owe. Penalties and interest rates can be high. 

• A credit card may be offered to you by a bank in which you hold an account free of charge, or with a joining fee. You may also have to pay an annual fee. 

• Credit cards come with reward points each time you swipe them, and these differ from card to card. You can also avail deals and offers, along with other perks.