How are Credit Cards and Debit Cards Different?


Debit cards and credit cards are two of the most widely used financial tools in India. Back in 2015, 15% of all digital payments were made using debit cards while 11% of them were made using credit cards.

The difference between debit and credit card is that the former can be used to make payments and withdraw cash from the holder’s savings account. On the other hand, credit cards are used to borrow the money from the issuing company and repay after a certain time period.

What is a debit card?

A debit card is linked directly to your account. Any payments made with the card will be directly debited from that account.

Debit cards are mostly used to withdraw cash from ATMs. They can also be utilised to make all types of transactions.

What is a credit card?

Unlike debit cards, a credit card is not linked with your account. It comes with a line of credit or credit limit, which is the maximum amount that you can borrow and spend. The card issuer will generate a bill on a particular date of every month and send it to you asking to repay the amount you have spent with the card.

Credit cards are mostly used to purchase goods and services. They can also be used to withdraw cash from ATMs but with interest. However, some credit cards like the Bajaj Finserv RBL Bank SuperCard let you withdraw cash from ATMs and repay the same with 0% interest for up to 50 days.


Difference between debit and credit card:

#1 Reward points

Debit cards

Standard debit cards that come when you open an account with a financial institution provide little to no reward points for transactions. You can only earn high reward points with premium debit cards. Also, such debit cards have minimum or zero annual charges.

Credit cards

Almost every credit card provides reward points with every transaction. Compared to debit cards, you can earn higher reward points while spending even a minimum amount with these cards. All credit cards come with annual charges which can be waived off at times by the lender when limit utilisation reaches a certain threshold.


#2 Benefits

Debit cards

You only receive benefits when you opt for premium debit cards. Standard ones don’t provide any as such.

Credit cards

There are numerous credit card benefits that you can receive. For example, free movie tickets, offers on dining, complimentary accesses to airport lounges, etc.

#3 EMI financing

Debit cards

EMI financing with debit cards is available only from limited financial companies and on selected products.

Credit cards

All financial companies provide EMI financing options with their credit cards. You also get the No Cost EMI option in which you don’t have to pay any interest when paying for your purchase via monthly instalments.

#4 Personal loans

Debit cards

There are no ways of availing personal loans against a debit card as it is linked to your account.

Credit cards

A major difference between debit and credit card is the latter’s personal loan facility. You can avail a personal loan against the unutilised limit of your credit card during emergencies. What’s advantageous is that you don’t have to pay interest on it for a certain time period.

The Bajaj Finserv RBL Bank SuperCard provides such an emergency personal loan facility. You can repay the loan in three easy EMIs with 0% interest for up to 90 days.

Bajaj Finserv also provides pre-approved offers which make it considerably less complicated to avail the card. Additionally, these pre-approved offers come with an array of financial products and services including home loans, business loans, personal loans, etc. You can find your pre-approved offer by providing only a few essential details online.

#5 Grace period

Debit cards

Debit cards don’t have any grace period for bill payment as the amount you pay is debited instantly from your account.

Credit cards

Here, the grace period is the duration cardholders get for bill payment. Credit cards usually have a grace period of up to 45 days. This comprises one billing cycle (usually of 30 days) along with the additional time (15 – 20 days) provided post statement generation to clear of the same, levying no interest.

#6 Credit score

Debit cards

Debit cards don’t have any positive or negative impact on your credit score irrespective of its usage.

Credit cards 

One of the significant credit card benefits is that these can help you improve your CIBIL score and credit history. A high credit score makes you more creditworthy to avail unsecured financing in the future.

#7 Security

Debit cards

Any frauds with your debit cards will lead to your account getting debited instantly. You may have to go through much hassle to get your money back.

Credit cards

Credit cards provide numerous security features for protection against online frauds. Card issuers usually grant a chargeback in such cases.

Lastly, another difference between credit card and debit card is the availability of various travel insurances with the latter. Thus, credit cards can be more beneficial when it comes to making transactions. If you are planning to apply for a credit card, ensure to approach a reliable and reputed financial organisation.


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