4 Key Difference Between Credit Cards & Debit Cards

  • Updated on: 18 Jul 2024
  • Published on: 4 Dec 2023
4 Key Difference Between Credit Cards & Debit Cards

The main difference between credit cards and debit cards is that the former involves borrowing credit. Thus, using a credit card affects your credit score. Both cards share some common features while also offering some unique features. Choosing the right one is thus crucial for effective financial management. 

Thankfully, there are some credit card and debit card differences that can help you decide which card is ideal for you. Read on to understand the features of debit cards vs credit cards. 

A Guide to a Debit Card

You usually get a debit card automatically when you open a bank account and therefore, you need not apply for it. The card is linked with the same account and you can access all the cash available in it. Since these funds belong to you, you don’t pay any interest when using a debit card.

A Guide to a Credit Card

To get a credit card, you need to apply for it. The issuer will approve your application based on your credit profile and their policies. Using a credit card allows you to get a 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. When you do so, the limit is restored for the next billing cycle. 

Interest only applies to the outstanding balance of your credit card. Generally, credit card issuers levy no interest for up to 45 days. In addition, you can get access to a range of perks, such as reward points, cashback, discounts, fuel surcharge waivers and more when you use a credit card. 

Also Read: Benefits of credit card

What is the Difference Between a Credit Card and a Debit Card?

Here are key points of difference between credit cards and debit cards. 

Interest Charges

Debit card transactions are interest-free as you use the funds directly from your bank account. 

However, with a credit card, 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. 

Cash Withdrawals

Debit cards allow you to access cash with ease at any ATM. The fees that apply are minimal and negligible. However, if you use a credit card 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, credit cards have a limit on how much amount you can withdraw as cash. This does not apply to debit cards. 

Annual Charges

In the case of debit cards, you typically pay annual maintenance charges. At the same time, you need to pay a renewal fee for credit cards. Some credit card issuers may waive these charges if you meet the transaction milestones. 

Spending Limit

Debit cards have a spending limit of up to your account balance. On a credit card, 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 credit card limit. This facility is not possible with debit cards. 

Now that you know what is the difference between a debit card and a credit card, choose the ideal option. If you are leaning towards a credit card, opt for the Fibe Axis Bank Credit Card and enjoy a plethora of benefits. 

From up to 3% cashback to fuel surcharge waivers and complimentary domestic airport lounge access, this card helps you boost your life.  Download the Fibe Instant Cash Loan App or register on our website to apply now. 

FAQs on Difference Between a Credit Card and a Debit Card

Which is better: a debit or a credit card?

The better option between a debit and credit card depends on your financial habits and requirements. Knowing various credit card and debit card differences can help you choose the right one. For instance, a credit card offers a range of cashback and benefits that a debit card doesn’t but comes with interest penalties if you do not repay in full every month. 

Is an ATM card a debit or a credit card?

Neither. An ATM card gives you easy access to cash and you can only use it at an ATM. On the other hand, you can use a debit or a credit card directly to make purchases and enjoy other benefits. You can use both these cards to get cash from an ATM too. 

Can I withdraw money from a credit card?

You can withdraw money using your credit card. However, this facility comes with fees and charges based on your credit card issuer and the amount you withdraw.


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