Knowing about the difference between credit cards and debit cards is crucial now than ever before. This is because the popularity of credit cards in India is steadily rising. Both these cards look similar and generally have a 16-digit identification number.
However, both these products have their pros and cons and come in handy for different solutions. By knowing about their usage, you can easily choose which card would be more beneficial for your payments.
What is a Debit Card?
Here is a brief overview of this financial product:
- A debit card is a financial tool linked to your savings account.
- When you use a debit card to make a transaction, the amount gets deducted from your account.
- Generally, banks offer ATM-cum-debit cards that you can use to withdraw cash from ATMs.
- These products allow you to manage your daily expenses without incurring any debt.
What is a Credit Card?
While these products may look similar to debit cards, they serve different purposes. Here is a brief overview and a few pointers to note:
- A credit card is a financial product that allows you to access short-term debt from the issuer.
- During this period, the issuer will make payments on your behalf if they fall within your credit limit.
- Once the billing cycle ends, you will have to make a partial or complete repayment.
- You can enjoy various credit card offers and benefits that allow you to maximize your savings.
Difference Between Debit and Credit Cards
Check the following table to know the difference between credit card and debit card offerings.
| Basis | Debit Card | Credit Card |
| Payment | When you transact, the amount gets deducted from your bank account. | The transaction amount gets deducted from the card’s credit limit |
| Impact on Credit Score | Purchases made using debit cards don’t impact your credit score in any way. | If you don’t manage your expenses well or fail to pay your credit card bills on time, your credit score will dip. |
| Rewards and Benefits | Debit cards offer limited rewards in the form of cashback and discounts. | These cards provide a wide range of rewards in the form of reward points, air miles, or cashback. |
| Credit Building | This doesn’t help you establish credit or improve your credit score. | This card helps you boost your credit score if you keep the credit utilisation low and pay your bills on time. |
| Spending Limit | The limit you can spend depends on the amount in your linked savings account and your usage limits. | The spending limit of a credit card corresponds with its credit limit. |
| Interest Charges | You don’t have to pay any interest on the amount you spend using a debit card. | These tools come with an interest-free grace period, after which the rollover balance will start accruing interest. |
| Annual Fees | They have no or low annual charges. | The annual fees depend on the type of credit card. Certain high-end and premium credit cards can have high annual fees. |
| Purchase Protection | Debit cards have a low purchase protection level. | Compared to debit cards, they have a higher purchase protection level. |
| Cash Withdrawal | You can make cash withdrawals with these cards from ATMs with no or minimal charges. | You can withdraw a small portion of your credit card limit in cash through ATMs. However, you’ll have to pay a cash advance fee for it. |
Pros of Using Credit and Debit Cards
Check the advantages of using a credit card:
Advantages of Credit Cards
- It makes short-term credit available for you with ease.
- You can use credit cards to convert your big purchases into affordable EMIs.
- The rewards available by these cards can help you maximize your savings.
- If you use the card responsibly, you can improve your credit score over time.
- Credit cards come with various security features, such as EMV chips and additional fraud protection.
- You can use this card if you are short on cash during a financial emergency.
- These cards can help you with effective budget management and financial discipline over time.
Advantages of Debit Cards
- Debit cards are widely accepted by most retailers across the country.
- They’re highly convenient and save you from the hassle of carrying cash.
- You can use these cards to shop online easily at trusted retailer websites.
- You can get a debit card with ease and without any complex process.
- They typically have no or lower annual fees than credit cards.
- You don’t incur interest on spending money using your debit card.
While both have their upsides, a credit card lets you extract a lot more value from your purchases. With the attractive rewards and deals at various retailers, it is a great tool to have. To get a premium card and spend confidently, knowing you always have full control, get the OneCard Credit Card.
This premium metal credit card allows you to earn up to 5X rewards, convert big bills into EMIs, and track rewards and transactions through its powerful mobile application. With tools to simplify reward point redemption, accessing favorable deals is simpler than ever. Apply now to get these benefits and more.