Difference Between Debit and Credit Card

Many still don’t know the difference between Debit and Credit Cards. Debit cards are most popularly known as ATM cards in India.

During the post-liberalization era, the Indian consumer had very less time in a Day and was looking for self banking. Thanks to K V Kamath who started the modern banking revolution – ATM, Online and Mobile Banking.

ATM/Debit Card:
Debit Cards are always tied to a Bank account [Savings or Current]. Earlier, Debit Cards came with a 4 digit PIN [Personal Identification Number] and you could use it to withdraw cash, view statements etc. They served as a Teller for your Bank account. These days, in addition to PIN and teller type ATM transactions, debit cards are endorsed by VISA or MasterCard and they can be very conveniently used like credit cards, but only if you have sufficient balance in your Account. Since you are using your own money, their is no APR [Annual Percentage Rate] or Interest.

Credit Cards:
Credit Cards are basically unsecured loans given to you by a Bank or a Financial Institution. Every credit card has a pre-set spending limit / credit limit. In India, the banks look at your Income Tax returns or your salary slip and fix the credit limit. Their is a payment grace period [upto 30 days] within which you have to payback the amount you have spent on your credit card failing which you will be charged an interest on the amount used. Depending on your credit card usage and payment record your credit limit will be raised.

CardBhai suggests always be very conservative when using credit cards.

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