Do you know the differences between credit and debit cards ? No? Do not worry! Later we will solve your doubts.
Although we use both cards as a payment instrument when making our purchases, they are not the same. Each type of card has characteristics that differentiate them from each other. Do you want to know what they are? Next, we will explain everything you need to know about debit cards vs. Credit cards.
What is a debit card?
It is a financial tool issued by a banking institution, which consists of a plastic card. This card has a magnetic stripe in which the information regarding the bank account holder, the number, among others, is stored.
Now, this instrument is associated with a bank account. This means that all the payments you make will be automatically deducted from the available balance in your bank account. That is why, in the event that you do not have money in the account, you will not be able to make any payment.
If you want to request a debit card, you must take into consideration that you require a savings account or a checking account to which you can associate this financial tool. Although they tend to be a free service, some banks establish fees to be paid annually to maintain the service. In certain cases, some additional commissions must be paid when other services are associated.
What is a credit card?
It is a banking instrument that contains a series of numbers and a magnetic strip, or a microchip that allows you to make purchases. These payments are generally debited from a line of credit granted by the bank. This means that you will have to pay those charges plus interest within a specified period.
Unlike the debit card, to request the credit card the bank requires you to comply with a series of conditions and requirements. This is because the bank has the responsibility of verifying that you have sufficient payment capacity to meet payment commitments.
Main differences between debit and credit card
Debit cards Vs. Credit cards, which is the best option? Next, we will present their main differences, so that you can choose the one that best suits your needs:
- The debit card is directly associated with the balance of the user's checking account. Unlike credit cards that allow you to work with money provided by the bank.
- When you are going to withdraw money at an ATM or make a payment with a debit card, the amount is deducted from the balance of the associated account. And in the event that you do not have a sufficient balance, the operation will be denied. On the other hand, when they are paid with credit cards, the bank is the one that is going to lend you the money and you will have to return it the following month, or in different installments plus interest.
- Applying for a credit card tends to be more complex than applying for a debit card. This is because, since it is the bank that is lending the money, it has to ensure that the client will be solvent with the payment of the installments.
- When there are payment of commissions, the same are usually cheaper the commissions of debit cards, than those of credit cards.
Now, we have already done a review of the most outstanding differences of both payment instruments. Take into account that purchases made with your credit card must be paid with additional interest. For this reason, the best recommendation is that you make sure you control your debts and take care of your finances.