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Bank Cards - Understanding Credit Cards vs Debits Cards

Updated on May 31, 2011

Debit Cards or Credit Cards - Which one is better according to you?

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The services offered by banks are designed to meet customer needs. Therefore, one of the most important strategies banks use to win customers is to offer its users financial instruments and tools to facilitate banking. Thus, among these instruments, one of the most popular mechanisms that are welcome by people around the world are bank cards. Bank cards are financial instruments through which you can make payments and collect money without the need of visiting a bank, so you don’t have to stand in long queues to withdraw or deposit money and to perform other types of financial transactions. Through bank cards, banks give us a unique identity (card number and CVV number), which allows automated functions while performing different types of money transfers including depositing money, withdrawing money, paying electricity bills, paying bills for shopping, paying for hospitalization, paying insurance bills, and performing various other tasks online and offline. Bank cards are based on standards defined by the network to which they belong.

How To Use Your Credit Card or Debit Card

Two types of bank cards - debit and credit

There are two types of bank cards. The first one is a debit card and the second one is a credit card. Each type of bank card attempts to meet different needs and payment capabilities of a particular client. The debit card allows a provision of maintaining account balance in the savings account, which means you must have money in your bank account to perform financial transactions whereas a credit card allows the user to perform financial transactions with the need of maintaining balance in the credit account. It means that the bank gives us a certain amount of credit to do shopping, paying bills, etc. considering your credit score. If you make the credit card payments and maintain your credit in a good manner, you will be able to receive further credit and if are not able to do that and your credit cards goes overlimit, the automated system of credit management performed by bank servers will put a hold on your future credit card transactions.

Debit vs credit card security

In simple words, once there is zero balance in your savings account, you cannot use the debit card whereas in credit cards, once your credit limit is over, you cannot make any further transactions. Both debit cards and credit cards are financial instruments that are pretty safe and easy to use whether online or offline. The transactions done via debit and credit cards are processed through a secure encrypted server; therefore, there is little risk of card information theft, though you need to read and understand the terms and conditions of using these cards where it is written that, “you must not share your debit card or credit card number and passwords with anyone, even if it is a bank officer”.

Credit card as flexible loan

You can also link certain credit cards with a credit mode, so it can be linked to a credit account; however, this does not happen with all cards. You can request a credit card in several ways and without many conditions laid upon by banks due to its high level of demand and supply. Many smart people consider credit card as a flexible loan which has many benefits among which the most important is to make domestic and international purchases without visiting a banking facility.

BPO call center credit card fraud

Disadvantages of credit cards

There are not so many disadvantages of debit cards but there are several disadvantages of credit cards, the most important of them is using credit cards without any budget planning. In this situation, a user considers the credit card as plastic money, a fashion statement, and starts using it for making purchases that are not so much necessary. This is the reason why most luxurious items bought around the world are purchased via credit cards. In most situations, the credit crosses limit and the card gets blocked or temporarily suspended and if the user is unable to pay the credit card dues on time, the debt starts increasing at high rates leading to credit card debt.

So it is important to understand credit cards vs debit cards before getting one. Also, it is highly recommended to maintain a good credit score to apply for future loans. Grant and disbursal of all types of loans whether mortgage loans, car loans, personal loans, consumer durable loans, etc. depend on your credit score. Don’t ruin your credit score with credit card over limits. Pay your credit card dues on time. Also, Managing payment of both banks cards, credit cards and debit cards is important to achieve healthy personal finances.


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    • profile image

      Barry Shields 

      8 years ago

      Thanks for the tips on credit repair on this particular blog. Things i would tell people is usually to give up the actual mentality that they buy at this moment and shell out later. Like a society many of us tend to do this for many issues. This includes holidays, furniture, and also items we want. However, you'll want to separate your current wants from all the needs. When you are working to improve your credit rating score you have to make some trade-offs. For example you may shop online to save cash or you can go to second hand merchants instead of high-priced department stores regarding clothing.

    • soni2006 profile imageAUTHOR

      Rajinder Soni 

      8 years ago from New Delhi, India

      @C. J. Andrews thanks for voting and going through in such a detail with this hub. I will surely check out your hub on swipe fees.

    • CJ Andrews profile image

      Chris Andrews 

      8 years ago from Norwalk, Ohio

      Voted it up and useful. Good information - I just finished an article on swipe fees that you might want to check out as well. The U.S. has major problems and seems to be trying to make them worse all the time. Good article and keep up all the great work. Looking forward to reading more of your info.


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