Credit & Debit Card: What's the difference?

Nowadays, we tend to go for seamless transactions, and that includes the payment methods we use. Since the pandemic started, many people resort to cashless transactions when we do our settlements online.

Some individuals are puzzled on how Credit and Debit cards differ. Here's a quick guide on how you can determine the capabilities and accessibilities of both cards.

Debit Cards

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A Debit Card looks like a credit card too, but they are completely different. Banks usually provide debit cards to their account holders to easily access their funds with the convenience of not having too much paperwork to be done before they can withdraw their funds.

It is linked to your personal or checking account and can be used anytime and anywhere you would like, as long as the establishment you are buying from is accepting this kind of payment method. Debit cards have a logo of a Visa or Mastercard which may look like a Credit card. When you fund your bank account with your Debit card linked, you can use the money on your account as cash. There are some instances that you need to input your Personal Identification Number (PIN) for your purchase.

Aside from using it as a payment method, you can also withdraw cash from your Debit Card whenever you wish using the PIN that you set up, and you're good to go. This type of card is usually advisable for those on a budget who would like to manage their finances.

Credit Cards

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A Credit Card is a payment method in arrears and is subject to approval. Not everyone can have a Credit Card, especially if you are unemployed or not fit to maintain a monthly payment for it. To have one, you must fill out an application and is subject to the Bank's approval.

Some banks require proof of income, proof of residency and the likes. This information is asked to build your credibility, which needs to be approved. Other banks conduct a background check or Credit Investigation (CI). To make sure that you submitted the correct information on your application.

If you are approved to have one, you may use it as you wish, but it has a limit. There might be a time that you'll not be able to pay on time and that's where the bank acquires an amount from you which is called "interest". Most credit card companies allow 30 days before the interest will be charged on your current balance.

Credit Card vs Debit Card

When using a debit card, you can use the funds right away, and the money on your account will be deducted right away. When using a credit card, you can spend as much, but you may pay your dues at a later time.

You can no longer use your Debit card if your account runs out of funds, but you may use your Credit card even though you don't have enough money from your account. Credit Cards help you build your credit standing or flunk it.

Using both cards would always depend on how you use them. Although there are conveniences when using it, there is also some risk when using the cards. If ever your Debit Card is lost, there are difficulties when trying to recover the funds that were used in that instance. For Credit Cards, you can easily report the stolen card, but your liability will be limited.

These cards are also being used for online transactions. In OlePlatform, we accept these types of cards for your business transactions. Others use it to fund their Cryptocurrency affairs and the likes. You may transact as you wish with utmost security.