Compare the difference between credit and debit cards
When you are about to receive your first bank account and start managing your money, you begin to encounter many new financial conditions. The two terms that make people confused are debit cards and credit cards because they are quite similar in appearance and function. However, credit and debit cards are very different from each other. Let’s learn how to distinguish these types of bank cards in this article:
The definition of credit cards and debit cards
Debit cards are issued by banks based on your current accounts at that bank. You can use a debit card to buy things with the amount available in your accounts.
When you use your debit card to make a payment or withdraw money from an ATM, the amount is directly deducted from your account. This can be a problem in an emergency, especially when your account is low on balance.
Credit cards give you a credit limit from which you can borrow money to make payments. You will have to repay the borrowed amount within a specified time, after which the limit is reset.
The credit limit depends on different factors, for example, your credit score, your age, your income, etc. Interest is only charged on the exceptional amount in the event of deferred payment. You can also benefit from considerable loyalty points, cash back or discounts on tickets, online shopping, travel bookings and more.
Currently, all retail banks offer both debit cards and credit cards for qualified customers. When looking for the best bank card, you can consider the top ten reputable banks in your own residential area. Some banks may offer interest-free credit cards and cash withdrawals, great rewards and benefits, and different types of cards to suit your needs.
Is an ATM card a credit card?
An ATM card, as the name suggests, is basically used to withdraw money from an ATM. These are PIN code cards and therefore they are simply used to withdraw money from ATMs. ATM cards are normally issued by financial institutions and can be used to withdraw money from the savings account or checking account of the account holder.
Credit or debit cards can be used as ATM cards (to withdraw money). However, when you use credit cards to withdraw money from ATMs, you will be charged a large amount of money as credit cards are not designed for this function.
Debit cards generally offer simpler eligibility conditions and limit the risk of indebtedness. Moreover, you can also choose to save money in your own bank account or not. On the other hand, credit cards provide additional spending flexibility, but there is a risk if you cannot pay the money back immediately.
Understand the difference between “credit” and “debit” when making an in-store purchase with your debit card.
Do I pay with “credit” or “debit” cards?
There are two different ways to process a debit card at the time of purchase. The first choice is known as the “debit / online / debit PIN” method: you enter your PIN at the point of sale (POS) and the money is quickly debited from your account. You must use the debit feature if you want to get cash back during your transaction.
The next choice is known as the “credit / offline / debit by signature” method: you select the “credit” button, performing the transaction through a credit card processing network. A hold is placed on the money for the transaction in your account, which is cleared or processed within a short period of time (1-2 days later).
Should I use a credit card or a debit card?
Choosing a credit card or debit card depends on your own financial needs and goals. And while taking your situation into account, it might be a good idea to have these two cards.
Credit cards can be an incredible tool when used correctly. When your credit score is strong enough, you might be in a better position to get lower interest rates on loans. Also, it can shorten your time to achieve goals like buying a car, owning a house or apartment, or even a better limit on your credit card.
Debit cards have their place, too: If you’re looking to keep spending in check, a debit card can help you stick to a fixed financial plan and spend only on what you need. And if you keep in mind that you need to maintain your account limit, debit cards won’t ask you to cover a bill every month.
Can I use a debit card like a credit card?
In fact, you can use credit and debit cards to purchase goods (in grocery stores or markets, etc.). However, debit transactions may require your PIN code before officially making payments. And payments on credit may require a signature on your part. There may also be contrasts in the speed with which transactions are debited from your account. Debit transactions can be billed faster than credit transactions.
In conclusion: What types of bank cards should I use?
The instruction to use a debit card or a credit card is quite equivalent: you have to swipe, insert or use a mobile wallet to complete your transaction with both types of cards.
However, the differences between credit cards and debit cards are notable:
- A debit card is more convenient when you want to access the amount of money in your bank account.
- A credit card is more like a loan that has to be paid off later with interest.
Of course, all kinds of financial products or services have their pros and cons. Therefore, you need to understand the distinction between debit cards and credit cards in order to make sound decisions that suit your situations.
Online loans in Vietnam
Unlike credit cards, online loans are generally issued with a small amount of money. However, consumers should ensure their ability to repay on time to avoid further penalties. Please consider your repayment capacity before officially borrowing money online (vay tiền online nhanh) or even before receiving a credit card.
In order to provide the best solution for those facing financial difficulties, OnCredit is deploying an online loan counseling service in Vietnam only. You just need to register an app by following the instructions on our website / apps. OnCredit partners will offer you the most suitable loan if you are qualified enough. Visit the website or download the OnCredit app and register now!