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

What is a Debit Card?

What is a Credit Card?

Credit Card Vs Debit Card: Key Differences

The table given below helps in understanding the distinctions between credit and debit cards and making informed decisions:

Parameter

Credit Card

Debit Card

Definition

Allows you to borrow money from a line of credit.

Deducts money directly from your bank account.

Source of Funds

Your card issuer extends credit.

Your bank account.

Spending advantage

You can spend more than what you have.

You can only spend what you have.

Who pays for the purchase?

The credit card company pays for your purchase. You pay the credit card bill later.

You pay for your purchase.

Bill

You get a bill or statement each month.

There is no bill or statement.

Payment

You have to pay the bill by the due date.

There is no payment to be made.

Charges

Joining fees, annual fees, late payment fees, interest charges, and other fees may apply.

Annual fees and PIN regeneration fees may apply.

Interest

Interest is charged on the outstanding balance if not paid by the due date.

There is no interest charged since there is no credit involved.

Limit to funds that can be accessed

You can access up to the pre-set credit limit on your card.

You can access up to the amount available in your bank account.

Rewards

You can earn cashback, air miles, reward points, and other incentives.

Typically, the rewards are minimal.

Privileges

You can enjoy dining, shopping, entertainment, travel, and other privileges.

There are very limited privileges.

Lost card liability

Most cards offer 100% lost card liability protection.

Protection from theft or loss of the card is minimal.

What are the Pros and Cons of Credit Cards?

What are the Pros and Cons of Debit Cards?

Which is Better Credit Card or Debit Card?

Frequently Asked Questions