Have you ever been confused about the difference between Credit Card and Debit Card or mistook Debit Card for Credit Card? Well, this post would enlighten you on the difference between these two banking cards. Also check out How to Block your Stolen ATM Card Instantly (Dial this USSD code).
First, we will begin by defining that which is common and used almost on a daily basis by Nigerians, and that is the Debit Card. Popularly known as ATM (Automated Teller Machine) Card,
Debit Card serves as a means whereby one can perform transactions and have the total valued amount deducted directly from his/her bank account balance. Debit Card comes in light plastic and rectangular forms, with a microchip area which stores the personal information of the user.
Almost every bank user owns a Debit Card, and uses same to withdraw funds, pay for online products or services, transfer funds or make payments via POS.
Credit Cards on the other hand perform the obverse function of what Debit Cards do. Though the physical features of a Credit Card remain the same with a Debit Card, they differ in functionality.
A Credit Card is linked to your Bank’s line of credit, and allows you to borrow money then repay at a later time with a charge.
This is how it works. Every Credit Card has a limit, this means that there is a maximum amount of money you can borrow from your bank, and this amount is determined by your credit score.
Take for instance, you encounter an emergency and you do not have any cash at hand or in your bank account, your Credit Card can come to the rescue as you can have your bank pay the amount on your behalf, while you repay later with an interest.
The major difference between a Debit Card and a Credit Card is that the former is linked directly to one’s bank account, and one can only spend to the tune whatever amount is domiciled in the account. However, with a Credit Card, you can take amounts above your bank balance, but within your credit limit. Also, Credit Cards are linked to the user’s line of credit.
Also, no interest is charged on transactions done with Debit Cards. This is, however, not the case with Credit Cards, as customers have to repay a higher amount because of the interest fee charged.
Howbeit, a Debit Card can be used as a Credit Card in the sense that one can perform transactions such as withdrawals and fund payment, but one should not make the mistake of taking one for another, because funds expended through a Debit Card is from an individual’s bank account, and there is no provision to go overboard with expenditure if the need arises. Only a Credit Card can do this.