Debit Card Vs. Credit Card

The real difference between a debit card and credit card is imprinted within the names of the two cards. The debit card enables you to withdraw or 'debit' the amount from your bank accounts, to which the card is attached, whereas in case of a credit card, you 'credit' the money which means that you borrow the money from your credit card company. The debit card and credit card difference in theory implies that while using a debit card you spend that is you have an expenditure which is directly deducted from your bank account, whereas, when you use a credit card, you spend, that is have an expenditure as well as have a liability of the spent amount plus the APR (Annual Percentage Liability). From the point of view of consumer economics both the cards and their programs are great, but if you compare debit card and credit card, then the debit card is a better option.

A Comparison: Debit Card Vs. Credit Card

Technical Difference: The technical difference between the two is very, very simple.

• Debit Card: When you swipe a debit card it acts exactly like a bank check or even direct cash. The amount gets transferred (deducted) from your bank account to the vendor from whom you have purchased. The debit card can be attached to any account, a bank savings account or even a current account. The basic thing is that you are spending your own hard owned money, but the only difference is that you are paying through the debit card instead of giving out a check or direct cash. A debit card is not a prepaid card or a charge card where the financial institutions levy generous fees for all transactions. Please note that some financial institutes have a policy of charging some sum of money to cover up processing charges on an annual basis, the fee is negligible.
• Credit Card: A credit card as the name suggests is a card where every card swipe means that the card users have borrowed money from the credit card company. Indeed in such a case, the company bears the expenditure on the behalf of the credit card users, and the total sum is repaid to the firm through a monthly bill. An APR (which is substantial) or an annual percentage rate is charged upon the total payments made through the card. Late fees, fines and membership fees levied on the card, and with effect owning and using a credit card has expenditures of its own.

User Advantages and Disadvantages: The following are some of the advantages and disadvantages of the two.

• Debit Cards: There are some advantages of using a debit cards. The debit card for example does not have an extra charge (conditions exist) or an APR. The user effectively does not have to pay off any extra fee or charge to the card provider. The debit card can also be used to withdraw cash from an ATM or from the vendor himself. Another very good provision that can be used by the debit card holders is that they can overdraft from their account free of charge in many cases, till a certain amount, especially if the card is provided by a bank. Please note that there are certain fees taxes that are levied if the card is used for very high amounts. Some common debit cards include, Visa Debit, Visa Electron, Interac, Laser, Maestro, Solo, Switch, etc. The only possible disadvantage is that very, very addictive spending can prove to be dangerous.
• Credit Cards: A certain resentment and negative feeling about credit cards has generated in the American people, in the post recession era. The high and floating APRs, late fees and fines are some of the drawbacks of a credit card. There are certain advantages, a high credit limit, increase in credit score, perks, etc. Some popular credit card providers include, American Express, VISA, MasterCard, CitiGroup etc.

From a common man's point of view, I would always prefer a debit card owing to the fact that it is anti-materialistic and promotes good and wise spending habits.