Credit Card vs Debit Card: What is the difference? Know usage, fees, renewal and othe details

Credit Card vs Debit Card: Credit Card and Debit Cards have helped spread digital transactions across the country. However, there are still scores of users confused about the difference between the two types of cards. Are you also confused about credit and debit card? Customers can use both these cards for cash withdrawal and payments. However, there are some fundamental differences. Read on to understand.

Debit cards are directly linked to the bank account of the users. With the help of the debit card, you can withdraw the money that is already deposited in your bank account. You can make the withdrawal 24x7 from an ATM. All cash withdrawals using ATM cards are not chargeable. However, banks put a limit on the number of free ATM cash withdrawals. In contrast, with the help of credit card, you can withdraw cash on credit, or the amount that is not already available in your account.

Credit cards come with a cash withdrawal limit. However, banks charge some amount for every withdrawal. For example; the HDFC Credit Card levies a transaction fee of 2.5% (Minimum Rs 500) on the amount withdrawn, which is also billed to the customers. If you fail to return the withdrawn money to the bank before the due date, the banks charge a late fee and a hefty interest rate on the withdrawn amount. Both debit and credit cards can be used for making online and offline shopping.

Credit cards come with a monthly credit limit depending on the credit-worthiness of the customer. One can withdraw with the debit card only that much amount that is already present in the account. Banks, however, put a daily withdrawal or purchase limit on the debit cards.

Generally, banks do not charge annual or renewal fees on debit cards. A number of credit cards also come with no annual fee. Some credit cards, however, charge an annual fee and waives it off when a customer reaches certain amount of spends. Some specialised credit cards come with an annual fee.

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With credit cards, a customer can enjoy several benefits like cash back, discounts and reward points that can be redeemed either into cash or some goods and services. Debit Cards also offer benefits like discounts and cash back. A number of online transactions allow the use of Credit Cards only.