Basics of Credit Card and Debit Card

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Basics of Credit Card and Debit Card

A credit card provides you a credit facility which allows to purchase things immediately, up to a certain credit limit, and pay for those later. This has no connection with your current bank account. On the other hand, you can pay for products in a shop and withdraw money from an automated teller machine (ATM) using a debit card. The money is automatically deducted from your current bank account whenever any transaction occurs.


From barter system to introduction of currency to debit and credit cards, life has reached to the level of convenience that no one could ever dream of. When debit and credit cards were newly introduced, possessing one was a big deal. We good actually boast about carrying one of our parents’ cards in our wallet at school, even if it had no money, just a card would be enough to leave a cool impression on our mates. While today, debit and credit cards have become so ordinary to carry. Nearly all people who own a bank account have either a debit or a credit card or both. Since credit cards are yet not so common, a debit card is a must to have.

Cards against cash

Who carries cash today? First it’s not safe, second it’s quite a responsibility to carry it in public, and third it feels like unnecessary weight. Whenever we get our account open we are asked to apply for a debit card which helps us to use it for ATM cash withdrawal and retail transactions at shops. The banks charge a nominal fee which is surely worth the ease that a debit card brings toour life. However, there are some people who would just take a checkbook instead due to fear of losing the card or getting it stolen. It totally depends on one’s choice. Similarly, we can apply for a credit card in order to make purchases on credit. It doesn’t allow us to useit at the ATMs for cash withdrawals but we can use them at retail stores to the agreed limit.

Debit Card or Credit Card?

Sometimes it becomes hard for us to decide whether to go for a debit or a credit card. It’s hard to tell which one would suit us the best so one can decide by considering the differences between the both.

  • While making purchases from a debit card, we don’t have to pay the interest, whereas a credit card charges interest if the credit bills are not cleared on the due date which is mostly the last day of the month.
  • It’s safer to carry a credit card while traveling than a debit one because then there are chances that if we lose a debit card then anyone can make purchases from the amount already there in our account which our bank wouldn’t be willing to refund to us in case we have a fraud encounter.
  • A credit card provides uswith the opportunities of the reward programs which are mostly absent in debit cards. We normally get more discounts on a credit card than the debit one.
  • It is better to use debit cards at hotels and resorts because mostly they prefer credit cards to charge in case they later find we’ve caused damage to their property so they can send us the bills pertaining to the loss faced by them. We can never trust if the loss was actually caused by usor somebody else.
  • In debit cards there’s no hassle of monthly bills whereas in credit cards there is.
  • The application process in a credit card is a little messier as compared to the debit card in which we don’t have to show any security and documents but just sign a single piece of paper and we’re all set.

Key Facts and Statistics

  • 41.2% of all American households have some kind of credit card debt in September 2018.
  • American households with zero or negative net worth have credit card debt of an average of $ 10,308 in September 2018.
  • The West and Northeast Coast of America both have the highest average debt on credit cards averaging over $8,000.
  • As per Statista, VISA is the top among the debit card issuers by purchase transactions worldwide.
  • The number of VISA debit cards globally is about 1.63 billion in 2018.
  • As per Statista, in the U.S. the number of MasterCard debit cards is around 210 million in 2018.
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