When you are about to receive your first banking account and start managing your money, you begin to encounter a great deal of new financial terms. The two terms that make people confused are debit cards and credit cards as their look and function are quite similar. However, credit and debit cards are very different from one another. Let’s learn how to distinguish these kinds of bank card 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 spend buying things with the available amount of money in your accounts.
When using your debit card to make a payment or withdraw money from an ATM, the amount is straightforwardly deducted from your account right away.
When using your debit card to make a payment or withdraw money from an ATM, the amount is straightforwardly deducted from your account right away. This could be an issue during emergencies, especially when you do not have enough balance in your account.
Credit cards give you a credit limit from where you can borrow an amount of money to make payments. You will need to pay back the borrowed amount within a specified time, following which the limit is restored.
The credit limit relies upon different factors, for example, your credit score, age, income and so on. Interest is charged on the exceptional amount only if there is a postponed payment. You can also benefit from considerable reward points, cashback or discounts on tickets, online shoppings, travel bookings and more.
Currently, all the retail banks offer both debit cards and credit cards for qualified customers. As you look for the best bank card, you can consider the top ten of reputable banks in your own residential area. Some banks might offer interest-free credit card and cash withdrawal, excellent rewards and benefits along with different types of cards to suit your needs.
Is an ATM card a credit card?
An ATM card, as the name proposes, is basically used to withdraw money from the ATM. These are PIN-based cards, and hence, they are simply used to withdraw money from ATM machines. ATM cards are normally issued by financial institutions, and can be used to withdraw cash from the account holder’s savings account or checking account.
Credit cards or debit cards can be used as ATM cards (to withdraw money). However, when using credit cards to take money at the ATM, you will be charged a large sum of money as credit cards are not designed for this function.
Debit cards generally offer simpler terms of eligibility and limit debt risk. Additionally, you are also able to choose whether to save money in your own bank account or not. On the other hand, credit cards offer additional spending flexibility, however there is a risk if you can’t pay the money back immediately.
Understand the difference between “credit” or “debit” when making an in-store purchase with your debit card.
Should I make payment with "credit" or "debit" cards?
There are two different ways a debit card can be processed at the moment of purchasing. The first choice is known as the “debit/online/PIN debit” method: You enter your PIN at the point of sale (POS) and the money is promptly debited from your account. You need to utilize the debit function if you want to get cash back during your transaction.
The subsequent choice is known as the “credit/offline/signature debit” method: You select the “credit” button, making the transaction through a credit card processing network. A hold is placed on the money for the transaction in your account, which clears or processes in a little while (1-2 days later).
Should I use a Credit Card or a Debit Card?
To choose a credit card or debit card relies upon your own needs and financial goals. And while considering your circumstance, it might be a smart choice to have both of those cards.
Credit cards can be an incredible tool when used in the right way. When your credit score is strong enough, you could be in a better situation to get lower interest rates on loans. Also, that can shorten your time to achieve goals like purchasing a car, possessing a house/flat or even getting a better limit for your credit card.
Debit cards also have their place: In case you’re looking to restrict your spending, a debit card can help you stay within a fixed financial plan and spend only on what you need. And when keeping in mind that you should keep steady over your account limit, debit cards will not ask you to cover a bill each month. You may also want to check out a debit card for kids under 13.
Can I use a Debit Card like a Credit Card?
Actually, you can use both credit and debit cards to purchase goods (at groceries stores or markets, etc.). However, debit transactions may require your PIN before officially making payments. And credit payments may require a signature of yours. There also may be contrasts in how soon transactions are charged from your account. Debit transactions may be charged more quickly than credit ones.
In conclusion: Which types of bank cards should I use?
The instruction of using a debit card or a credit card is quite equivalent: you need to swipe, insert, or use a mobile wallet to finish your transaction with both kinds of cards.
However, the differences of credit cards and debit cards are notable:
- A debit card is more practical when you want to access the sum of money in your banking account.
- A credit card is more similar to a loan that must be paid back later with interest.
Of course, all kinds of financial products or services have their pros and cons. Hence, you must comprehend the distinction between debit cards and credit cards so as to make thorough decisions that meet your situations.
Online loans in Vietnam
Unlike credit cards, online loans are usually issued with a small sum of money. However, consumers should ensure their ability to repay on time to avoid other penalties. Please consider your ability to repay 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 who are having financial difficulties, OnCredit deploys an online loan consulting service in Vietnam only. You just need to register an application by following the instructions on our website/applications. OnCredit’s partners will offer the most suitable loan for you if you are qualified enough. Visit the website or download the OnCredit app and Register Now!