Among the many electronic payment systems in vogue today the most popular form is card payments. There are two main types of cards, debit cards, and credit cards. Many people are still confused as to the difference or similarity between the two cards, however, it is actually not as mysterious as it seems.
To begin with, let us explain in as precise and concise a way as possible. Credit cards allow the holder to make purchases on credit, whereas the debit visa card holder needs to have the amount plus some transaction fee in his or her account to be able to make any payment using the debit card. As the name suggests the amount is debited from card holder’s account immediately when the debit card is used. This is opposed to a credit card where the cardholder does not need to have the amount he or she is going to spend. As long as the amount is within the ‘credit limit’ of the card the transaction will be carried through and the holder will have to return the money to the card company in installments or in one single payment.
What is a Debit Card?
Debit cards offer the convenience of a credit but work in a different way. Debit cards draw money directly from your bank account when you make a purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their bank and it is transferred to the merchant’s account. It can take a few days for this to happen, and the hold may drop off before the transaction goes through. For this reason, it is important to keep a running balance of your checking account to make sure you do not accidentally overdraw your account. It is possible to do that with a debit card. You will have a PIN to use your debit card at stores or ATMs. However, you can also use your debit card without a PIN at most merchants, you will just sign the receipt like you would with a credit card.
Features of a Debit Card:
- A debit card is tied directly to your bank account.
- It can serve the purpose of a credit card also.
- Generally, you will use your PIN or a generated One Time Password (OTP) to complete the transactions.
- It is the general and most used card issued by your bank to you after opening a bank account.
- They always have a Visa®, Mastercard® or other financial service company logo on the card face.
- The front of a debit card includes the debit card number, the expiration date.
- The back of a debit card includes the customer service number (3-digit code), The signature bar, the card verification value, and some of the issuing bank logos.
What is a Credit Card?
A credit card is a card that allows you to borrow money in small amounts at local merchants. You use the card to make your basic transactions. The credit card company then charges you interest on your purchases, though there is generally a grace period of approximately thirty days before interest is charged if you do not carry your balance over from month to month.
Features of a Credit Card:
- A credit card is a line of credit you can access with your card.
- Generally, you must sign on these purchases.
- You will pay interest on the purchases made if not paid off in thirty days.
- Credit purchases typically do not require a pin to be entered at the time of the transaction.
Protecting Your Debit and Credit Cards:
Both a credit and debit card have similar risks when it comes to theft. If your credit or debit card information has been compromised, you will need to contact your bank immediately. You should also take additional steps and monitor your credit report to make sure that your identity was not stolen, It is important to check your statements each month to make sure you can identify all charges. The banks limit the length of time that you can report a fraudulent charge on the account. The bank will freeze the account and issue you a new card when you report that the card has been stolen or you see an unauthorized transaction.