Credit Card vs Debit Card: What's the Difference

Confused between a Credit Card or Debit Card? Wondering which one you should use when?

Our guide will help clear your doubts.

The basic difference between Credit Card and Debit Card

You can use both Credit Card and Debit Cards to pay for your purchases online or offline. The key difference between the two is what happens after you swipe your card.

Debit Cards are directly linked to your bank account (such as a salary or savings account). When you use your Debit Card, the amount is deducted directly from your bank account.

Credit Cards give you the benefit of buying now, paying later. When you use your Credit Card, your bank extends you credit for a certain period. You must pay the bank for your purchase within a specified date (also called the due date).  Apart from this, there are plenty of additional benefits depending on the Credit Card you opt for.

Credit Cards or Debit Cards: The comparison

• Credit Limit
  
  Credit Cards have monthly credit limits, which will depend on the kind of card you have, your relationship with the bank and your credit-worthiness.
  Debit Cards can be used only up to the amount that is present in your bank account. However, the bank may have a daily purchase limit on your card.

• ATM withdrawals 
  
  Cash withdrawals on a Credit Card attract a withdrawal fee and interest
  Debit Cards generally do not levy a cash withdrawal fee, especially if you transact at your bank’s ATM.
  Both Debit Cards and Credit Cards have a daily cash withdrawal limit. In addition, Credit Cards may have a monthly withdrawal limit.

• Interest
  
  Credit Cards come with up to 50-days of interest free credit. To avoid interest, you must pay your outstanding amount by the due date.
  Since the amount is paid directly out of your account in the case of a Debit Card, you need not pay any interest.

• Annual fees 
  
  Many Credit Cards have no annual fee. Some do charge an annual fee, which is waived off on achieving a certain amount of spends on the card. A few specialised cards charge an annual fee.
  Banks usually do not charge annual or renewal fees on Debit Cards.

• Benefits 
  
  Credit Cards offer you a wide range of benefits and perks including cashbacks, discounts and, most important, rewards that you can convert into free flights and exciting gifts.
  Debit Cards also offers benefits such as discounts and cashbacks.

• Usage 
  
  In terms of usage, there is generally no difference between Debit Cards and Credit Cards. Both can be used at merchant outlets and online.
  However, there may be certain types of transactions or websites which only allow the use of Credit Cards.

• Eligibility
  
  Most Credit Cards have basic eligibility criteria, based on income, existing relationship and credit-worthiness
  You can get a Debit Card easily if you have a savings or current account.

• Security features 
  
  Both Credit Cards and Debit Cards have similar security features, such as SMS notifications, PIN and OTP.
  Many Credit Cards come with zero liability insurance* for stolen and lost cards, which Debit Cards don’t offer.

Are you looking to apply for HDFC Bank Credit Card? Click here to know more!

* Terms & conditions apply. Credit Card approvals are at sole discretion of HDFC Bank Ltd