Do you know the differences between credit and debit cards? Do not? 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 features 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. 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 strip in which the information regarding the bank account holder, the number, among others is stored.
However, this instrument is associated with a bank account. This means that all payments you make will be automatically subtracted from the balance available in your bank account. That is why, in the case that you do not have money in the account, you will not be able to make any payment.
If you wish to request a debit card you must take into account that you require a savings account or a checking account with which you can associate this financial tool. Although they tend to be a free service, some banks set fees to pay 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 stripe, or a microchip that allows you to make purchases. Generally, these payments are debited from a credit line granted by the bank. This means that you will have to pay those charges plus interest within a certain 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 due to the fact that the bank has the responsibility of verifying that you have sufficient payment capacity to fulfill the payment commitments.
Main differences between the debit and credit card
Debit cards vs. credit cards, what is the best option? Next, we will present its main differences, so you can choose the one that best suits your needs:
- The debit card is directly associated with the user’s current account balance. 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 sufficient balance the operation will be denied. For its part, when paying with credit cards, the bank is the one that will lend you the money and you will have to pay it back the following month, or in different installments plus interest.
- The request for a credit card tends to be more complex than that of the 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 fees.
- When payment of commissions exists, they are usually cheaper than debit card commissions, than those of credit cards.
Now, we have already reviewed the most important differences of both payment instruments. Take into account that purchases made with your credit card must pay them with additional interest. For this reason, the best recommendation is to make sure you keep your debts under control and take care of your finances.