The main difference between a debit card and a credit card is the method of payment. On a debit card, the payment is charged directly to the holder’s checking account. Thus, they only allow collection up to the limit of the funds in the account. With the credit card it is possible to pay even if funds are not available, since it is possible to postpone the payment until the following month. In this way, the holder contracts a debt with the bank.
Before granting a credit card, the bank studies the viability, making sure that the client is solvent and assigns him a maximum credit limit for that card. The credit can be returned in different ways: at the end of the month (a set day of the month following the one in which the purchase is made), by means of a percentage (which we will disburse every month) or a fixed fee (this modality is known by the name of revolving, and consists of paying a fixed amount established).
Credit cards allow you to finance: pay in installments and make your purchases without having to disburse the total payment as long as the limit granted by the Bank is not exceeded. This implies that interest is charged to the holder in the case of deciding to postpone payment. On the other hand, with debit cards, the amount is charged directly to the cardholder’s account, and is deducted directly from the balance.
Credit card vs debit card at the ATM
There are also differences if you want to withdraw cash at an ATM. If you use the debit card at an ATM of the financial institution that issued it, normally, you will not have to pay any commission. On the other hand, if you withdraw cash with your credit card, it is possible that the bank will charge you interest for advancing that money. Withdrawal of cash by credit card is against the credit limit granted by the bank and not against your checking account.
On the other hand, credit cards usually have a series of free insurances that, for example, protect you in the event that you buy a defective object.
Both debit and credit cards are very practical in your day-to-day life and, in the case of the latter, they are a very good option in case you need financing for unforeseen events or purchases of large amounts.