Credit cards and debit cards look identical. Both types of plastic cards bear the 16-digit number markings and have details like the expiration dates and personal identification numbers (PIN) inscribed. Credit cards and debit cards are similar in more ways than one; they can be used to withdraw money from an ATM machine and to make cashless transactions either online, or offline at a point-of-sale terminal.
That said, it is also important to understand the differences between credit cards and debit cards. Credit cards, by definition provide you with additional credit, while debit cards, as the name suggests, debit the amount you spend from your bank account. Thus, while credit cards allow you to borrow money from the card issuer up to a certain limit, debit cards allow the cardholders to make cashless transactions by drawing on the funds that are already deposited in their bank accounts.
What is a debit card?
Debit cards are issued by banks against your current or savings accounts and you can use it to spend only the amount of money already available in your accounts. When you swipe your debit card to make a payment or withdraw money from an ATM, the money is directly deducted from your account immediately. This could be a problem during emergencies, in case you do not have sufficient balance in your account to spend.
What is a credit card?
On the other hand, a credit card gives you a credit limit from where you can borrow funds to make payments as and when required. You need to pay back the borrowed amount within a stipulated time, following which the limit is restored. The credit limit depends on various factors such as your credit score, age, income etc. Interest is charged on the outstanding amount only in case of delayed payments. You can also avail substantial reward points, cashback and discounts on movie tickets, online purchases, travel bookings and more.
As you look for the best credit card in India, you can consider the Bajaj Finserv RBL Bank credit card as it offers interest-free loan and cash withdrawal, shopping on no cost EMI facility, excellent rewards and benefits along with different types of credit cards to suit your unique needs.
Is an ATM card a credit card?
An ATM card, as the name suggests, is primarily used to withdraw cash from the ATM. ATM cards are generally issued by financial institutions, and can be used to withdraw money from the account holder’s savings account or checking account. These are PIN-based cards, and hence, they are only used to withdraw money from ATM machines.
ATM card or credit card?
A pure ATM card can only be used at ATMs and kiosks. These cards are used to withdraw cash, make deposits, or to perform banking-related activities, such as checking the balance amount, or transferring funds between accounts. While these are also plastic cards, they only serve a single, specific purpose. Credit cards, on the other hand, are multi-functional, and can be used to make online and offline payments, withdraw cash from ATMs, or to pay bills. Thus, credit cards offer greater flexibility and convenience as opposed to the mono-functional nature of ATM cards.
The fundamental difference between a debit card and a credit card is that upon using your debit card, the amount will be debited from your checking account. However, when you use a credit card, the amount will be withdrawn from your pre-approved credit limit, and not from your bank account.
You can use your debit card the same way you use your credit card for making payments. This can be done at merchant stores, restaurants, and e-commerce platforms among other places. If you are paying in person, you just have to swipe your debit card on a PoS machine (or insert the card’s square smart chip), similar to how you pay with your credit card. If you’re making payment online, you can type in your card number, along with a few other details, such as the expiration date and month, along with the CVV number.
Today, e-commerce platforms like Amazon and Flipkart let you pay for the products you purchase on EMIs by using your debit card, similar to how credit cards are used. However, your bank has to pre-approve this facility.
Additional Read: Why Credit Cards are better than Debit Cards