Credit and debit card. Discover the key differences

Often when buying something on the Internet, we notice that one of the forms of payment is a “credit card”. However, contrary to appearances, it is not configured with our bank account.

Unfortunately, many users tend to confuse it with the concept of a debit card, which is a separate financial product. So what’s the difference between the two forms of payment?

Debit a Credit – in a nutshell

Debit a Credit - in a nutshell

Visa and MasterCard are currently two of the most popular payment companies, whose logos are on all cards used in Poland – this applies to both debit and credit cards. Thanks to this, on one hand, we can make electronic payments not only in Poland, but also in the world. On the other hand, almost identical plastics are difficult to distinguish, and hence the straight path to ambiguity and the resulting problems. It is good to know what each card is characterized by.

The basic difference between a loan and a debit card is the inscription “debit” or “credit” often placed on the right, just above the logo of the payment card operator. In this way, banks are required to provide information on the status of plastic. Once, the significant difference between them was that the credit plastic was in the form of convex numbers and letters, and the debit plastic was completely flat. Currently, the banks’ offer is so unified that distinguishing them from each other is quite a mess.

Debit card, ie issued to the account

Debit card, ie issued to the account

A debit card is a payment tool that is connected directly to our bank account. At first glance, its name can be misleading, because it is clearly associated with “debit” – so the usual statement of being “on the downside” … However, it is mainly about access and the ability to dispose of independently accumulated money. The name of the debit comes from the Latin term “debit”, which is closely related to accounting and simply means “debiting operation”. Of course, we can spend more than we have on the invoice, but in this case, we have to activate the option, the so-called revolving loan or credit line, commonly known as an overdraft.

Apparently, the devil is in the details, so how does debit work in practice? Wherever there are ATMs or payment terminals, the role of a debit card is invaluable. Thanks to it, we can make cash and non-cash transactions or use deposit machines. We can also make payments in stationary retail and service outlets, as well as on online auction sites and stores. In addition, regular monthly payments to the account or making the right amount of non-cash transactions also guarantee the reduction of plastic maintenance costs.

What about the credit card?

credit cards

This is a slightly more complicated product than a debit card in terms of use. However, their mechanisms of action are almost identical. Well, using a credit card we do not spend our own money accumulated on the bank account. For this purpose, we use the money borrowed from a banking institution. How much credit limit can we afford? In fact, it is determined by our creditworthiness on the basis of which the bank sets a quota for available funds. What is important, every time we use credit plastic, we contract the so-called consumer loan.

A modern credit card is appreciated due to the fact that we use funds that are not charged from our own bank account. However, such comfort and convenience cost a lot. Of course, we can use a free credit card for about 56 days. This is called the “Interest-free period”, which means that if we settle the liability at that time, we will not pay anything more for the funds borrowed. After this date, interest will accrue at the interest rate indicated in the contract.

A convenient form of credit – but is it always?

This kind of plastic money, despite the fact that, like a debit card, it is the optimal solution for non-cash transactions. However, it doesn’t work as well anymore with cash operations. For the most part, credit cards carry high costs: like a commission for withdrawing cash from a machine and loss of the interest-free period, or “grace period”. In addition, the bank charges service fees related to plastic inactivity for owning the card.

How do you get a credit card?

How do you get a credit card?

The loan is available to persons who are over 18 years of age, demonstrate creditworthiness and achieve any income. In this way, banks verify our credibility as a credit customer who is able to pay off their liabilities. Therefore, if we meet the above condition, there are no contraindications to apply for a product.

An adult owner of a credit card can also make an additional card, ie another credit card on which a limit is set, but for another person, eg a family member. Then the second user can use the card limit of the main owner, but only up to the set amount. The additional card is paid in the same way as a classic loan, ie once a month.

Payment cards are more options

Payment cards are more options

To sum up, payment cards are such a convenient means of transaction that it is difficult to imagine everyday functioning without them. They guarantee flexible management of your home budget – fast and comfortable transfers, purchases or payment of current bills. However, which product is better – debit or credit, depends primarily on our needs and financial capabilities.

If we want ATM withdrawals and we don’t want to spend more than we have, then the debit card option is definitely better. However, when we are looking for a quick loan tool and at the same time we value cashless transactions, our expectations will be met by a credit card. Let’s just remember that you have to deal with it responsibly and reasonably because in the end we will have to pay the borrowed money back to the banking institution.

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