Credit
and debit cards are very similar and even they are accepted at the same places.
Many novices still find them similar because they are not clear about their
basic difference and usage. Credit and debit card both are for customer’s
convenience and the fundamental difference between them is their destination to
pull the money. In Debit cards money
comes out directly from your current bank account and no interest is charged
unless you reach your overdraft limit whereas in credit cards
charges are transferred to your line of credit and interest is charged if you
don’t clear your credit amount at the end of the fixed time period. Debit cards
are moreover like a cheque whereas credit cards are like personal loan.
Debit
cards draw money directly from your account when you make any purchase. In this
case the merchant sends transaction id to your bank and later on the amount is
transferred to the merchant’s account. That is why it is necessary to keep a
running balance in your account. Debit cards are more popular because they
allow consumers to live within their means and they do not have any annual
fees. They are either connected to your bank account or are prepaid ones. On the other hand, credit cards are kind of a
loan and allow you to borrow money from various local merchants in small
amounts.
These
cards even charge interest on your purchase amount but that happens only in
case when you fail to pay the amount within your grace period. For Australian
customers a reliable website is available, i.e. debitcard.com.au to render
information related to credit and debit cards. This site even helps them in
finding out the best card as per their requirements. Debit Mastercard and Visa
Debit are accessible here and before buying customers can even compare
their services to select the suitable one.
Some of the basic comparisons between
credit and debit cards are:
- Credit card can only be used as credit card but debit card can be used as both credit and debit card.
- In credit cards users are supposed to pay additional interest on the amount borrowed, which is no where applicable in case of debit cards.
- Responsible usage and payment of credit card can improve your credit rating whereas all these things do not affect your credit history in case of debit cards.
- In debit cards higher amount of risk is involved
because anyone can easily carry out transactions and can drain the money
from account. On other hand such risks are very low in credit cards.
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