Credit card or debit card: Which one should you use?
By Ankit Sharma
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Are you new to the world of ‘plastic money'? Do credit cards and debit cards appear similar to you? While credit cards and debit cards may seem similar, they are quite different in the way they work and the services they offer. It's useful to understand the differences and know the advantages and disadvantages of each.

Credit card Vs Debit Card

A credit card enables you to borrow money while making purchases. The borrowed amount is not directly debited from your account at the time of purchase instead you are sent a bill every month for the sum total of your purchases. You have an option to pay your bill either in full or in part. Paying part will attract an interest on the balance.

Keeping the target customers in mind, credit card issuers offer various categories of cards like lifestyle credit cards for premium segment clients, airline cards for frequent travelers etc.

Before the economic slump, the Indian credit card industry was growing at an annual rate of 25 percent to 30 percent but in the wake of the crisis, credit card transactions declined giving rise to debit card usage that is considered safer and requires no credit to be extended to the user.

The word debit means subtract. As the name suggests, a debit card will subtract money from your account every time you use it.

A debit card ensures that you do not spend beyond your means. As soon as you swipe the card, it gets reflected in your bank account. The term ‘plastic money' is more relevant in case of debit cards since the risk of carrying a debit card is same as that of cash.

If you want a debit card, you must have an account with the bank issuing the card whereas for owning a credit card from a particular issuer you need not have an account with it. Therefore if you want an HDFC debit card you must have an account with the bank but if you want an HDFC credit card you need not have an account with the bank.

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Glenn (Posted: Jun 8, 2016)
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