What is the meaning of credit card and debit card?
Answers
A debit card is not a credit card. When you use a debit card, the money is deducted from your checking account. With a credit card, you're borrowing money to be repaid later. ATM and debit cards allow you to use ATMs, a safe and convenient way to manage your money.
Answer:
Credit and debit cards are plastic cards which provide an alternative mode to make financial transactions without using paper cash. Both these cards can be used to carry out online transactions.
Explanation:
The difference between the two cards is how money is deducted from the user’s account while making a payment or purchase.
Debit cards
Debit cards are linked to a customer’s current or savings account. When the user swipes his/her debit card to make a transaction, the money is directly deducted from their account. Using debit cards on one hand will check a user’s spending habits. On the other hand, a user won’t be able to withdraw money in an emergency if there isn’t enough balance left in their account.
Features of debit card include –
User will not incur any interest as it is linked to their bank account.
Debit cards are widely accepted in India and internationally.
Offers like cashpoints and rewards are earned on transactions with debit cards.
Only a transaction fee at max is charged on ATM cash withdrawals.
Credit cards
The meaning of credit card is a plastic card which allows the user to instantly access a line of credit offered by his/her card issuing company. These cards allow users to conduct transactions on credit.
Credit cards come with a pre-determined credit limit which is determined by the issuing financial institutions based on customer’s age, credit score and income. The borrowed amount needs to be paid off within 20 days. In case of delayed payments, an interest will be charged.
Features of credit card include –
Emergency loan can be availed by converting the unused credit limit to instant cash.
Timely payment of credit card bill can help improve the user’s credit score. A substantial credit score will make it easier for the user to apply for loans in the future.
Important transactions are easy to conduct with a credit card than debit card as the amount can be converted to EMIs and paid off.
Credit card and debit cards enable a user to manage their expenses. A user can directly control his finances with a debit card while responsible usage of credit cards will have a positive impact on an individual’s credit history. The meaning of credit card is to allow users make a substantial transaction with a line of credit. It therefore increases any individuals’ purchasing power.
Suggested Read: https://www.bajajfinserv.in/what-is-credit-card