What is the Difference Between Credit Card and Debit Card?

Business Knowledge

You will always be confused about the difference between credit card and debit card? In this blog, we are going to discuss credit and debit cards. Debit cards and credit cards are accepted at many places. They both created for your convenience and they both eliminate the need to carry cash. They even look similar. The only difference between a debit card and a credit card account is where the cards take the money. A debit card takes it from your banking account, and a credit card charges it to your credit line limit.

What is Debit Card?

 Debit cards draw money directly from your bank account when you make the purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their bank, and it is transferred to the merchant’s account. It can take a few days for this to happen, and the hold may drop off before the transaction goes through.

You will have a personal identification number (PIN) to use with your debit card at stores or ATMs. Some facts regarding debit cards.

  1. You won’t pay interest on your purchases.
  2. Your credit history will be unaffected by debit card spending.
  3. Paying with debit will take the money from your account pretty much immediately


  • There is no debt involved since you are using your own money.
  • It is cheaper to use since there are no interest charges involved.
  • Serves as an ATM card as well, so you can use it to withdraw money from an ATM.
  • Approval for a debit card is easier and faster.
  • Doesn’t help build a credit history.


  • You don’t have the ability to leave disposable cash in your account since money is directly debited.
  • It can complicate balancing your passbook at the end of the month if you don’t keep track of your spending.
  • You may be charged a fee if you withdraw money from a different bank ATM.
  • There is very little protection when it comes to debit card fraud.

What is Credit Card?

A credit card is a card that allows you to borrow money against a line of credit limit, You use the card to make basic transactions, which are reflected on your bill; the bank pays the merchant, and later, when you receive your bill, you pay the bank. You will be charged interest on your purchases. To avoid paying interest, don’t carry a balance over from month to month. Credit cards have high-interest rates, and your credit card balance and payment history can affect your credit score. Some facts about credit cards:

  1. The bank decides your credit limit based on your credit history.
  2. Generally, you no longer have to sign for in-person credit card purchases.
  3. You will owe interest on your purchases if not paid off in 30 days.


  • Credit cards are extremely convenient and prevent you from having to carry cash with you.
  • Credit cards help you build your credit score.
  • The rewards you earn are much higher than those on debit cards.
  • They provide you with flexibility when it comes to spending since they come with relatively high credit limits.


  • If you don’t pay your bills on time or in full, you are charged a high rate of interest.
  • Credit cards have multiple fees.
  • Missing a payment could end up adversely affecting your credit score. You then must work much harder to build it.
  • While there is a credit limit, you could always be tempted to spend more than what you have. This leads to debt.

Difference between Credit Card and CreditDebit Card

Elements Debit CardCredit Card
DefinitionDeducts money directly from your savings bank account or your current account.Allows you to borrow funds to pay for goods and services.
Source of fundsYour savings bank account or current account.Credit extended to you by your card issuer. It gives you access to money you otherwise do not have.
Spending advantageYou can only spend how much you have.Can spend more than what you have.
Who pays for the purchase?You pay for your purchase.The credit card company pays the vendor for your purchase. You pay the credit card company.
BillThere is no bill or statementYou get a bill or statement each month with details of the transactions you have made.
PaymentThere is no payment that needs to be made since you are using your own money.A bill needs to be paid each month since it is being borrowed.
Fees and chargesAnnual fees and PIN regeneration fees are applicable.Credit cards have multiple fees applicable. These include joining fees, annual fees, late payment fees, and bounced cheque fees among others
InterestThere is no interest that is charged.Interest is charged on the outstanding amount if it hasn’t been paid by the due date.
Limit to funds that can be accessedYou can access any amount up to what is currently available in your savings bank or current account.You can use the card only up to the pre-set credit limit on your card.
RewardsTypically, the rewards you get are minimalGet to enjoy cash back, air miles, and reward points which can be redeemed.
PrivilegesDoesn’t come with many privileges.Come with numerous dining, retail, entertainment, and travel privileges
Lost card liabilityProtection from theft or loss of the card is minimal.Most cards offer 100% lost liability protection. So, you are not liable for any unauthorized transactions 

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