A credit card and debit card may look similar and may be issued by the same authorities but they are fundamentally different from each other. Here, we are listing the basic differences between the two.
| Basis of Differences | Credit Card | Debit Card |
|---|---|---|
| Origin of Funds | When a person uses a credit card, the fund originates from the pool available to the cardholder. It is a loan from the card issuer that the cardholder has to pay later. | When a person uses a debit card, the fund originates from their savings account. It is the money of the cardholder that is used through debit cards. |
| Limit on the cards | Credit cards are issued with some pre-approved limits. A person cannot spend or transact over and above that limit. | The balance in your account to which your card is linked is the only limit on your debit card. The cardholder is free to transact within the limit of the balance in their account. |
| Interest and Repayment | Any amount withdrawn from a credit card has to be re-paid by the user and interests may be charged upon the same as per the agreed terms and conditions. | As the amount spent from a debit card is not a loan, there’s no scenario of repayment. The cardholder is also not liable to pay any interest on the transacted amount. |
| Offers and Rewards | Credit card companies come up with varieties of offers and rewards to attract customers. So, one can get many offers, rewards, and vouchers while using a credit card. | Nowadays, you can get some offers and rewards on debit cards too but they are comparatively very less than credit cards. |
| CIBIL Score/ Credit History | Credit cards are one of the easiest ways to improve your credit rating or CIBIL score that further helping you to take loans. | Debit cards have no impact on a person’s credit rating or CIBIL score. |
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"Credit Card vs Debit Card: List of Major Differences." Risemoneywise.com. Web. April 29, 2024. <https://risemoneywise.com/credit-card-vs-debit-card/>
Risemoneywise.com, "Credit Card vs Debit Card: List of Major Differences." Accessed April 29, 2024. https://risemoneywise.com/credit-card-vs-debit-card/
"Credit Card vs Debit Card: List of Major Differences." (n.d.). Risemoneywise.com. Retrieved April 29, 2024 from https://risemoneywise.com/credit-card-vs-debit-card/