With electronic systems in place for making and receiving payments, customers nowadays have multiple modes to pay for their purchases. In addition to traditional modes of payment like cheque and cash, customers can use debit cards, credit cards and internet banking facility to make payments.

a) Definition:

A credit card enables you to make payments without having an immediate impact on your account. A debit card on the other hand has an immediate impact on your bank balance. With credit card, you enjoy a predefined credit limit and period. Every month you are provided a statement of your transactions and you need to clear the outstanding balance before a specified date. However a debit card is issued against a bank account.

Whenever a transaction is performed using this card, your account balance gets reduced by the amount of transaction. For Instance, you have purchased a laptop online. You have a bank balance of $ 15,000. In case you have used your credit card to pay for your purchase, this balance will remain at $ 15,000 till the time you need to make actual payment. On the other hand, if debit card was used to pay for the transaction, this account balance of $ 15,000 will get reduced with the laptop purchase price.

b) Account Balance Confirmation:

When you make payment using a credit card, you have a credit period before which you need to clear the dues. In case you don’t have sufficient balance in your account at the time of purchase, you can arrange for the required funds before the due date of payment. In case of debit card, you need to have sufficient balance in your account before making a transaction. So you need to maintain an extra check while making payment using a debit card.

c) Need To Track: 

In case of a credit card, you need to remember the date on which credit card statement will get generate and you also need to make sure that payment is released before the due date to avoid any interest or late financial charges. In case of a debit card, you can track the transactions using your online internet account. Moreover, since the payment is directly debited to your bank account only, there is not much need to the track the status of any transaction.

d) Charges:

In case of any delay in payment of credit card dues, you might have to pay interest, late payment charges, and other financial charges which may turn out to be quite heavy. In case of a debit card, no such situation can arise in case you have sufficient balance in your account. However, in case of any overdraft, your bank can levy certain charges.

e) Security:

Credit card provides more security in the sense that in case any product turns out to be defective, or does not match the specifications, or even if there is an unauthorized transaction, you can register a dispute with the credit card company. Till the time matter is resolved, you are under no obligation to pay for the transaction. However in case of debit card, this kind of benefit is not available. Once a payment has been debited from your account, getting it reversed or claiming it back is extremely difficult.

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