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What is the Difference Between Credit Card and Debit Card?

As per data from the Reserve Bank of India, active credit cards saw a 27% hike May 2019 YoY. While there was an addition of around 10.3 million credit cards during this period, India lost some 107.4 million debit cards between June 2018 and June 2019. 

Even though India has been a primarily debit card market, the recent changes in figures show new-age customers’ preference for credit cards over debit cards.

The changing preferences are consequences of the difference between a credit card and debit card features. Credit cards are big on rewards, which debit cards don’t provide. Reward points, cashbacks, gift vouchers, and several other benefits are making credit cards the preferred option of Indians to make transactions. 

Cardholders only have to pay the credit card bill at the end of the due date to avoid paying any additional interest or penalty fees  

Subsequently, the following are certain features of credit card that users find beneficial, which differentiates them from debit cards.  

  1. Welcome bonus

Unlike debit cards, credit cards provide users with welcome bonus in the form of reward points. Users availing a new credit card are entitled to receive a welcome bonus depending on the eligibility and financial institution. Few reputed companies can provide up to 20,000 reward points as a welcome bonus.

  1. Interest-free cash withdrawals

Financial institutions let consumers withdraw cash from ATMs using their credit card for emergency access to cash. Availing cards like Bajaj Finserv RBL Bank SuperCard enables users to avail facility of interest-free ATM cash withdrawals for up to 50 days.

  1. Rewards and cashback

The primary difference between a credit card and debit card lies in the frequency of rewards and cashback. With credit cards, individuals can earn more rewards and cashback and can save a substantial amount monthly. 

By knowing how to redeem credit card reward points correctly, cardholders will be able to utilise the accumulated points efficiently. Consumers can redeem reward points through vouchers or claim cash benefits for some specific spends.

  1. Security against frauds

There are several types of credit card frauds customers may come across. However, the major difference between a credit card and debit card is that the former can provide users with protection against such threats and cyber frauds.

Credit cards come with zero fraud liability cover and in-hand security, which keeps users safe from all types of cybercrimes.

  1. Emergency loans on credit card

Credit cards allow individuals to apply for a loan against the credit limit they have been assigned to. In this case, they do not have to go through a lengthy loan application procedure to seek its approval.

The Bajaj Finserv RBL Bank SuperCard offers zero-interest emergency personal loan for a period of up to 90 days. 

The company also provides pre-approved offers on credit cards to minimise the time required to avail financing by making the process simplistic. These offers are available on multiple financial products such as business loans, personal loans, home loans etc. Check your pre-approved offer in seconds by providing essential details like applicant’s name and contact number. 

Even with such extensive benefits, cardholders must know how to pay credit card bills and the importance of such timely payment. Paying the total amount payable in a statement helps users to improve their credit score. By increasing the credit score, an individual becomes more creditworthy and can avail loans more quickly. 

The above difference between a credit card and debit card makes the former lucrative in several situations. Subsequently, making use of credit or debit cards wisely depending on the situation, nature of a purchase, and spending habits can benefit cardholders substantially.

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