Whether you know the function of a debit or credit card, you probably have seen people using it in a mall, shop, or in ATM. In our society credit or debit card has been so prominent that almost all businesses offer payment methods like debit or credit card. A debit card or credit card is a substitute for paper money. This card contains money, either stored or loaned out from a bank.
Debit card
In order to own a debit card, one must have a checking or savings account on a bank. The debit cardholder can only pay when he or she has money in his or her account. Taking a loan with a debit card while purchasing something is not allowed.
Credit card
The credit card doesn’t require a checking or savings account. In addition, the bank allows the credit card holder to loan out some money to purchase while they have no money in their account. The expense of the product or service is paid by a credit card. Each time an expense by a credit card while the account is empty is taken as a loan out some money and the bank takes the record of the loan.
At the end of the month, the bank comes to ask for the money that was loaned. If the person fails to pay the bank when the month is up, the bank charges a late fee or an added interest rate which continues to accumulate the longer someone fails to meet the deadline.
Being able to pay back time a full amount of money contributes greatly to one’s credit score which is extremely important as a sign of one’s financial stability.
A credit card comes with a credit end line which has a spending limit. The credit card user can take the advantage of spending advance but only to the limit. But you can’t do that with a debit card.
Security and interest rate
Most people believe the debit card is easy to use and track. But there is some security issue and no reward of having it. But credit card is totally opposed to it. The reward totally depends on If the money is paid back with responsibility. But the interest rate on your credit is very higher than on a debit card.
Conclusion
Dear reader, we have come to the end of this informative blog post. We hope, this blog post was helpful for you to learn about the difference between debit and credit cards. If you liked this blog post and if the blog post has benefitted you, then please don’t forget to leave your valuable rating about this blog post below.
