Despite the fact that the modest piece of plastic is an integral part of modern financial life, some people still do not know what a difference is between a credit card and a debit one. They confuse these products, but the distinction is more than significant.
Depending on their functional objectives, bank plastics are divided into two kinds:
- A credit card, as its name hints, implies the use of loaned bank means to pay for goods or services, which subsequently are required to be returned within a specified time.
- With a debit card, its owner can pay for what he or she needs, or withdraw cash only within the amount that is available on the current account connected to this plastic.
How to distinguish the plastics and choose a proper option? Visually, they are very alike; each plastic has such usual things as logo of the payment system (f.e. Visa or MasterCard), number and expiration date, as well as the name of the owner. The only visual difference may be the type of plastic – plastic with magnetic strip or plastic with a chip.
Their main difference is whose money is on the card:
- Debit card
A debit card is issued by the bank to store client’s personal money. It can be issued, say, to get salary from the company. You can replenish your account at any time or withdraw cash within the available amount through an ATM or at the bank’s cash desk providing a passport.
- Credit card
The most important distinctive feature of a credit card is that it contains funds owned by the bank and being rendered to you as a revolving credit line under certain conditions and during a specific period. You can pay by it for any purchases and services in stores or on the Internet within the limit you have allocated, and then return the funds and again use the bank’s money. Grace period does not apply to cash withdrawal, and for this operation the bank, as a rule, renders a commission.
How to determine what is better: debit or credit? Of course, everything depends on your goals and current tasks. The debit card is good virtually for everyone, while it is worth getting a credit card if you want to have more financial opportunities and to pay without delay to what you need at the moment, without putting it off.
In fact, a client can get several plastics in different banks or in one bank. A wide range of plastics with different terms and forms of rewards, each of which can be used in case of unique occasions, is a good choice. For example, one plastic is beneficial for airline tickets payment, and the second is for shopping. In addition, debit card allows a more flexible attitude to the grace period as a very reliable supporting mean.