Debit Card vs. Credit Card: Nowadays, almost every account holder possesses a debit card, and many people also use credit cards. While both cards may look similar, they function quite differently. With a debit card, you spend money directly from your bank account. In contrast, a credit card allows you to utilise a credit limit extended by the bank. Let’s understand the differences between the two, how to change an ATM PIN, and how to avoid interest charges on credit cards.
What is the difference between a debit card and a credit card?
Where does the money come from?
When you make a payment using a debit card, the money is deducted directly from your bank account; essentially, your spending is limited to the funds available in that account. With a credit card, the bank assigns you a specific credit limit. You can make purchases or payments within that limit and settle the bill later.
Is interest charged on debit cards?
Since a debit card uses funds from your own account, the amount spent does not incur interest in the way a credit card does. With a credit card, if you do not pay the full bill amount, interest and other charges may apply to the outstanding balance. According to RBI guidelines, the interest-free period ends if you do not pay the full outstanding amount on time.
Who gets a credit card?
A debit card is typically issued by the bank once an account is opened. For a credit card, however, the bank evaluates factors such as your income, credit history, CIBIL/credit score, and other eligibility criteria. As a result, not everyone receives the same credit limit or card type.
Which offers more rewards?
Many banks and card issuers provide cashback, reward points, discounts, and other offers with credit cards. However, these benefits often come with associated fees and conditions. So, rather than choosing a credit card solely based on rewards, consider the interest rate, annual fee, late payment charges, and other associated costs.
How to change the ATM PIN online?
If you suspect someone has discovered your ATM PIN or simply want to change it for security reasons, many banks offer an online option. First, log in to your bank’s mobile banking app or net banking portal. Next, navigate to the ‘Card Services’ or ‘Debit Card Services’ section. Select the ‘Change PIN’ or ‘PIN Generation’ option and choose the relevant debit card. Complete the verification process, such as entering the OTP sent by the bank. Finally, enter your new PIN and confirm it.
When is interest charged on a credit card?
A crucial aspect of using a credit card is understanding why it is important to pay the full monthly bill on time. If you pay the entire bill by the due date, you can benefit from the interest-free period available on standard purchases. However, if you do not pay the outstanding balance in full, interest may be charged, and the interest-free period benefit could be affected. Under RBI regulations, card issuers must disclose details on interest rates, fees, cash advance charges, and other essential terms and conditions.
How can you avoid credit card interest charges?
Keep these points in mind to use your credit card effectively: Pay the full monthly credit card bill before the due date. Avoid the habit of paying only the ‘minimum amount due.’ Limit your spending based on your income and avoid maxing out your card’s limit. Before withdrawing cash from an ATM using your credit card, check the applicable charges and interest rates. Review your card statement every month.
Debit Card vs. Credit Card—Which is better?
If you prefer to spend money directly from your account balance and avoid borrowing, a debit card is a convenient option. However, if you want benefits like cashback, rewards, special offers, or credit facilities—and can pay the full monthly bill on time—a credit card can be extremely useful.
Conclusion
The main difference between a debit card and a credit card is the source of funds. A debit card uses the money available in your bank account, whereas a credit card works based on a credit limit extended by the bank. When using a credit card, the most important thing is to pay the bill on time and, if possible, in full. When changing your ATM PIN, always use the bank’s official app, website, or another secure channel, and never share your PIN, OTP, or confidential card details with anyone.