Debit Card vs. Credit Card: How Are They Different?


Even if a lot of transactions have shifted to becoming cashless, there is still a huge percentage of people who are not aware of what exactly they are signing up for with a credit or debit card. Although most people have the basics cleared, there are important intricacies that people miss out on. So, here’s all that you need to know about them, and the way they differ from each other.

What is a credit card?

To put it in simple words, credit cards are payment cards issued by banks to allow holders to make purchases or avail services on credit. The bank pays for the products and services based on the cardholder’s agreement to pay the money back, with interest, according to the financial institution’s terms. If you’re wondering “how can I get a credit card?” The answer is simple. Build up a good credit score by paying your debts on time, have a verifiable source of income, and you are almost good to be approved by your bank for a credit card.

There are different types of credit cards, and depending on what you want for yourself, you can go for any one of them. There are the dedicated Cashback Credit Cards that offer attractive cashback of 5 to 25 percent on purchases made using the card. Along similar lines, there are also Lifestyle Credit Cards that offer exclusive dining privileges in the top restaurants all over the world. The Entertainment Credit Cards, as the name suggests, give attractive discounts on things like movie and show tickets.

One can also opt for a slightly different type of credit card known as Secured Credit Cards. These are cards that the bank issues after you deposit some amount of money as collateral.

What is a debit card?

A debit card is also another payment card, but instead of working on credit, it directly deducts money from a customer’s checking account for a purchase. Debit cards have been effective in reducing the use of cheques and cash as a means of payment. Debit cards also work as ATM cards, using which you can directly withdraw money from your bank account.

Credit card and Debit card: Differences

Although both are payment cards,  debit and credit cards are very different from each other.

  • The primary distinction between a credit card and debit card difference credit card and a debit card is that credit cards allow cardholders to borrow money from the card issuer up to a certain limit, in order to purchase items or withdraw cash. Debit cards on the other hand allow bank customers to pay for their purchases from their own checking accounts.
  • Debit cards usually come with daily purchase limits, meaning it might not allow customers to make a large purchase. Most credit cards, on the other hand, usually have a high credit limit that can come in handy during a financial crisis.
  • Credit cards also provide better security than debit cards. They offer better consumer protection through warranties and fraud protection.
  • Credit cards also provide better and bigger rewards as compared to debit cards. Debit cards generally offer 1% cashback.

Which one is correct for you?

Credit cards definitely provide more perks as compared to debit cards. You can use your allocated PIN to deduct money from your own checking account, but debit cards do come with daily purchase limits. In the case of credit cards, that limit is quite high. But credit cards also come with a lot of interest. Hence, if you’re aware of the things you’re signing up for, a credit card is definitely advantageous over a debit card.

We cannot talk about credit cards and not mention the Bajaj Finserv RBL Bank SuperCard. This unique 4 in 1 card allows the cardholders to withdraw interest-free cash from ATMs for up to 50 days. You can also avail of a personal loan for 90 days if you have the card, and find yourself in a financial emergency. All in all, the SuperCard does what a credit card does, and more.


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