There is always an underlying confusion regarding debit and credit cards and their functions. Many individuals confuse credit cards with debit cards and vice-versa as well. In order to solve this never ending confusion, here are some of the similarities and the differences between the two types.
The Similarities
Let us start off by naming the similarities which are the reasons behind the total confusion. It can be hard to differentiate both cards because of the following:
Allowing Perks
Both debit and credit cards allow their users or holders to avail certain perks. Each transaction awards the user with a certain number of points, and subsequently allows users to trade their points for goods. The more points you gather, the better the chances for you to win something.
Money
Both cards grant access to a certain limit of finance, based upon how much money you generally require. Let us assume your monthly spending is just under $5,000, if so, you will not have to worry about purchases made within this limit.
Emergencies
Both cards are accepted worldwide if they are affiliated with brands like Master Card or VISA. This means that the credit and debit card holders can use their cards to access their money any time, regardless of their location. This is the biggest advantage since you never know when you may run in to an emergency.
The Differences
Both the types have some distinctive features which allow them to be recognized as two different cards for different purposes. Let’s see what these differences are:
Money
Debit card holders use their own money from their bank accounts. Your salary which is directly credited into your account can be used and accessed through your debit card. Although, the money accessed through a credit card can also be used for the same purposes, that money is not yours. The amount accessed through a credit card actually belongs to the bank which you are borrowing only for a limited period of time. Once your salary comes in, the amount which you borrowed is deducted and the rest is saved in the account.
Nature
As you know by now, both cards are different in nature, one allows you to access the cash in your account without you having to run to the bank while the other allows you to use money like a loan.
Debt
Unfortunately, there are many individuals who suffer bad credit scores because they are unable to repay the bank on time after their credit card transactions. The biggest difference between the two cards is that credit cards can actually be the reason behind your debt. It is human nature to buy everything we like and knowing you have the amount needed encourages you to make a purchase. However, buyers usually tend to forget that this money has to be returned on time with a small amount of interest.
