Know The Difference Between Credit Card And Debit Card


You must be using credit and debit cards daily and frequent discussions over what is more advantageous are common. But how do these differences affect a cardholder personally? They are, of course, rectangular pieces of plastic. Credit cards and debit cards appear the same, yet they function differently.

Cashless transactions have become extremely popular with the introduction of debit and credit cards. All you need to do is swipe once to complete the payment process. Although both cards are used in the same way, they function differently. Let’s look at how debit and credit cards differ from one another. 

Credit Card

A credit card is a small card similar to a debit card. Currently, banks and other financial organisations are issuing credit cards. The face of the credit card has the cardholder’s name, credit card number, chip and expiry date. On the back, you’ll find the CVV, signature and magnetic stripe.

The method of payment is the main distinction between credit and debit cards. The amount of payment is not taken from your savings account when you use a credit card to make a purchase. You may make a purchase using a credit card. The bank or financial organisation that issued the credit card makes the payment.

The credit amount owed to the bank by the credit card user is due at a later time. Payment delays, however, result in penalties.

There is a pre-approved credit limit on each credit card. In other words, you can make several transactions till you reach the maximum amount set by the issuer. When you do not have cash on hand but want to make a big purchase, credit cards might be helpful.  

Debit Card

The bank where the person has a savings account issues a debit card. Debit cards are also given to corporate entities. These cards are connected to a current account.

A debit card is also a plastic card. Cards with magnetic stripes were formerly available. Now, EMV cards are used that have a security chip instead of magnetic stripes. These cards are safer and more encrypted compared to the previous cards.

A debit card’s face has the following information: a 16-digit unique card number, validity and expiry dates and the creditor’s logo, such as Visa, Mastercard and RuPay. The reverse side of the card includes the CVV, signature stripe containing the cardholder’s signature and customer service numbers.

A debit card is a tool for making cash transactions that may be used to purchase products and services. Your bank account gets debited when you swipe your debit card to withdraw money. The beneficiary’s account then receives the payments. Numerous transactions may be completed with a debit card.

You may transfer money from your account to another account and pay your utility bills and do online and offline shopping. You can also swipe your debit card at an ATM to get cash out of your account.

Difference between credit card and debit card

Credit CardDebit Card
DefinitionA credit card involves borrowing money from the bank. It is basically a loan that you will be returning at the end of the billing cycle.Debit cards allow you to access your own money.
Card FeeYou will be charged the same costs to use your credit card as before, but you may additionally be charged late payment fees, prepayment penalties and foreclosure fines.You must pay an annual maintenance charge and a joining and processing fee to continue using your debit card.
SecurityIf a charge on your credit card is incorrect, you have time to dispute it or block the card when stolen or when misplaced.When you use a debit card, money leaves your account right away, without allowing you to get your money back.
Restricted UseThe credit card can be used up to the predetermined limit. Debit cards, rarely, have daily use restrictions that apply to a certain amount.
SafeguardsWhen compared to a debit card, a credit card performs better at protecting the interests and privacy of cardholders. The issuing businesses offer protection that can cover fraudulent usage for up to the previous 7 days from the time of reporting the loss in any event of theft and misuse of a credit card.A debit card does not cover these problems.
IssuerA bank can issue you a credit card even if you don’t create an account.Your savings or current account is connected to your debit card. Only banks where you have such an account can issue debit cards.
Payable InterestThere are penalties for paying credit card bills late.When using a debit card, the money is deducted instantly. Therefore, no interest needs to be paid.
RepaymentThe cardholder must repay the outstanding balance through revolving credit, which means paying the minimum due amount or paying more than the minimum due amount but less than the whole amount owed. The cardholder may also pay off the whole balance before the deadline.Since you cannot use your debit card to make purchases on credit, no repayment is required. 
Monthly StatementsA statement or bill is delivered each month. Due to the transaction amount being granted on credit, this is necessary.A debit card does not generate monthly statements. Your account statement will allow you to review all of your debits in a month.
PrivilegesA credit card provides a lot of privileges. You can accumulate cashback, air miles and reward points by using a credit card.Debit cards often do not have any such rights or privileges.


It is relatively simple to mix up a debit card with a credit card. They look alike, after all. However, it is crucial to understand the distinction between a debit card and a credit card. Credit cards are the best payment method because they come with advantages and anti-fraud features. However, credit cannot be made available to everyone. It could be wiser to continue with a debit card until you can learn to manage credit responsibly, especially if you are a spendthrift. Debit cards prevent overdrafts and encourage you to spend responsibly. Thus, both are good options. The difference comes in where your convenience lies. You can choose wisely if you know the differences between debit and credit cards.

Piramal Finance is an online platform allowing you to learn everything you need to know about debit and credit cards, and other useful financial products. For other facts about personal loans, credit cards, and financial management, check out more blogs on their website!