What are differences between debit card and credit card?

 

 Debit cards and Credit cards: Debit card and credit card both are a payment methods that allow you to make purchases or withdraw cash, but they are works in different way and have different features.

Credit card is a postpaid card, Spend now and pay bill later and Debit card is a Prepaid card, you can use only amount which you have in your linked bank account.

Some key differences between debit cards and credit cards include:

1.Credit limit: A credit card has a credit limit, which is the maximum amount you can borrow from the financial institution. A debit card does not have a credit limit and the transactions are limited by the funds available in the linked account.

2.Interest: Credit cards come with an interest rate that you will have to pay on the borrowed amount if you don’t pay off your balance in full every month. But Debit cards do not come with an interest rate, as you are not borrowing money.

3.Fees: Credit cards can come with a variety of fees, including annual fees, cash advance fees and late payment fees. But Debit cards generally have fewer fees, but there can be charges for activities such as insufficient funds or ATM withdrawals.

4.Rewards: Credit cards often come with rewards programs that allow users to earn points, cash back, or other perks for using the card. A Debit cards typically do not come with rewards programs.

5.Credit history: Using a credit card responsibly can help to establish your credit history, which can be beneficial in the long run. A Debit card use does not generally help to establish credit history.

6.Security: Credit cards usually offer more protection against fraud and unauthorized charges, as you can dispute charges and request a refund if your card is used without your consent. But Debit cards, on the other hand, have less protection, and if you don’t report unauthorized transactions promptly, you might be liable for the charges.

It’s important to choose the one that better fits your needs and budget, and also be aware of the fees and interest that come with the card you choose. And also, it’s important to note that credit cards can help to establish your credit history, which can be beneficial in the long run.