Difference Between Credit Card and Debit Card

4 Key Difference Between Credit Cards & Debit Cards

The main difference between credit cards and debit cards is that the former involves borrowing from a financial institution. Both cards share some common features, while their key usage varies vastly. Choosing the right one is thus crucial for effective financial management.

Knowing these essential credit card and debit card differences is helpful in deciding which card is ideal for your finances. Read on to understand the features of credit cards vs debit cards that differentiate them from each other.

A Guide to a Debit Card

Upon opening a bank account, this card is provided to you automatically. So, there’s no need to submit an application for it. This card is associated with the same account and can be useful to access all the available cash. Because these funds are yours, there is no need to pay interest when utilising them.

A Guide to a Credit Card

To get it, you must send an application to your preferred issuer. They may approve your application based on your credit profile and their policies. Here are some other features you should know:

It comes with a fixed credit limit, using which you can transact online or offline
There is no interest applicable during the grace period, after which you need to pay your credit card bill
After the bill payment, the limit gets restored for the next billing cycle
Interest only applies to the outstanding balance
Depending on the issuer’s policy, you can enjoy up to 50 days of interest-free period
Enjoy perks such as reward points, cashback, discounts, fuel surcharge waivers and more

Difference Between Credit and Debit Cards

Here are key points of difference between a credit card and a debit card you should know.


Interest Charges	You borrow from the issuer. Thus, an interest applies if you do not pay the bill by the due date. In fact, delaying payments will also attract a late payment fee.	Transactions are interest-free, as you use the funds directly from your bank account
Cash Withdrawals	If you use it for the same, you will have to pay a high fee. This charge depends on the issuer’s policies and the amount you withdraw.Moreover, it has a limit on how much amount you can withdraw as cash.	It allows you to access cash with ease at any ATM. The fees that apply are minimal and negligible.
Credit Score	Your repayment behaviour and credit card management can improve or damage your credit score.	Debit card transactions do not affect your credit score.
Annual Charges	You need to pay a renewal fee for your cards. Some issuers may waive these charges if you meet the transaction milestones.	In the case of this card, you typically pay annual maintenance charges.
Spending Limit	You get a limit based on your credit profile and the issuer’s policy. If you need additional funds, you can also request the issuer to increase your limit.	Debit cards have a spending limit of up to your account balance. To get funds using this card, you need to deposit money into your bank account

FAQs on the Difference Between a Credit Card and a Debit Card

What is the main difference between a debit and a credit card?

A debit card is complementary to a current or savings account. On the other hand, a credit card is an independent financial product, enabling you to borrow and utilise funds based on the sanctioned limit instantly.

How can I tell if my card is a debit or credit card?

It’s printed on the front of the card. You can withdraw funds directly from your account using your debit card. However, in the case of a credit card, you need to repay the borrowed sum within the due date.

Which is better: A debit or a credit card?

The better option between them depends on your financial habits and requirements. The following differences can help you choose the right one.

Credit cards offer a wide range of cashback and benefits that a debit card doesn’t provide
There are no interest penalties on debit cards, but credit cards do levy these charges

Is an ATM card a debit or a credit card?

An ATM card is a debit card that gives you easy access to cash, which can be used only at the ATM. However, you can use a credit card and a debit card to make direct purchases as well as get cash from an ATM.

Can I withdraw money from a credit card?

Yes! However, this facility comes with hefty fees and charges.

Can I use my debit card like a credit card?

Yes. Some bank’s debit cards offer an overdraft facility to meet your urgent financial requirements. This gives you surplus funds when you don’t have a sufficient account balance and attracts interest, similar to a credit card.

Credit Card
4 Dec 2023

4 Key Difference Between Credit Cards & Debit Cards