Debit card
- Debit card means to deduct the money as the name itself describes the meaning of it.
- A debit card is a type of service provided by the banks to its clients to obtain goods and services from his saving bank account.
- In a debit card, money is deducted when an account holder makes use of it which is linked to the account holder's bank account number.
- An account holder is able to spend the money which is on his account, not more than that and when there is no money in an account, a debit card will be declined.
- A debit card is the same instrument like a cheque it means when an account holder uses it an amount automatically deducted.
- Bank charges fees on a monthly basis from the customers.
- A debit card is used to purchase goods, to transfer fund, e-banking, M- banking, to deposit fund and much more.
Credit Card
- A credit card is a type of service provided by the bank to its customers to make payment for the purchase of goods and services on credit.
- Credit card means money taken on a loan from the bank which must be repaid on time with the interest applied.
- In credit card, a payment is done by the bank as a third party to the seller on time.
- A credit card is given to an account holder based on the parameters like credit history, repayment capacity, income statement and debt.
- Fees are charged for the services and it is a monthly base.
- In credit card, banks usually allow a credit period of 30 days to repay a credit amount.
Features of Debit Card and Credit Card
- Both are small rectangle square plastic cards with a magnetic strip which holds information regarding the account, are issued by the bank.
- Both have 16 digit numbers which are different from the account number.
- Both are hassle-free, easier and fast instrument and an account holder has no need to carry money with him.
- Both are used to make purchases at the point of sale, over the phone, through mail order, and on the internet.
- On the back side of a card, both have a signature of the cardholder on the signature panel.
- No risk of theft and it protects against the fraud.
Difference between Credit Card and Debit Card
Meaning:
- A debit card is a type of service provided by the banks to its clients to obtain goods and services from his saving bank account.
- A credit card is a type of service provided by the bank to its customers to make payment for the purchase of goods and services on credit.
Payment:
- In a debit card, payment is done by the account holder immediately.
- In credit card, a payment is done by the account holder on a later date.
Bank Account:
- For issuing a debit card, there must be a bank account in the bank.
- For the credit card, there is no precondition to have an account in the bank.
Amount withdraws:
- An account holder is able to withdraw money up to the balance available in the account.
- A credit card holder can withdraw money up to the credit limit approved by the bank.
Interest and card bill:
- In debit card, there is no interest charged for using a debit card and no card bill at the end of the month for using a debit card.
- An account holder will get a monthly credit card bill for using in the last month with the prescribed rate of interest for using a credit card.
Connected to Account:
- A debit card is connected to an account holder’s saving bank account.
- In credit card, there is no need to connect a credit card with the card holder’s account.
Credit history:
- For issuing a debit card, a bank doesn’t need a history of an account holder and it doesn’t affect at all.
- For issuing a credit card, a bank needs credit history of an account holder and this is the most important parameter for issuing it.
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