Credit cards are very popular among shopaholics. The convenience of swiping and doing cashless transactions make credit cards the best companion in shopping. However, an alternative to credit cards are debit cards.
So what’s the difference and similarities between a credit card and a debit card? Both cards are used by cardholders to buy good and services without using cash itself. In addition, both cards can be used to make purchases at the point of sale, over the phone, through mail order, and on the internet.
A credit card uses a line of credit granted by a bank or a credit card company which in turn advances the payment to the merchant. In this case, the credit card holder becomes a borrower of the bank. When you exceeded your credit limit, you can no longer use your credit cards for purchases.
On the other hand, a debit card is linked to the card holder’s bank account. Therefore, the funds used in paying goods and services are automatically withdrawn from the user’s bank account. When you already consumed the funds linked to your debit cards, you can no longer use your debit cards.
Another way to put it, when making purchases, credit cards allow you to pay later while debit cards allow you to pay now but in in a cashless, secure, and convenient way, electronically.